I will just give a grasp on the idea of these insurances for those who haven't heard about it yet. Basically, people interested in not being the target of double-spends, as well as being capable of spending at all (the "freezing the network" attack scenario), could hire insurances for that. Say, for example, some organization wants to freeze bitcoin's network with a >50% attack. If that happens, insurers would have to pay a huge amount to their clients. They have a financial interest to rent enough processing power to outcome such attack as quick as possible.
Sorry, I'm just not seeing it. Relying on these insurers to counter any potential attack seems only one step removed from dropping the whole proof of work thing and just letting a few trusted servers synchronize transactions.
I'd much rather see a carefully planned incentive structure / branch selection criterion (which IMO should involve some combination of proof-of-stake, cementing, Bitcoin days destroyed and proof-of-work) which naturally leads to an efficient decentralized market.
(actually, I would expect most bitcoin users to collaborate... not only for ideological reasons, but simply to be able to spend their money again)
The effect each user's mining has on his own ability to spend bitcoins is negligible and not much of an incentive. That's pretty much what "tragedy of the commons" means.
If you want a more "discussed" scenario which can be compared to bitcoin's "transaction fee tragedy of the commons" scenario, I'd suggest the one of stateless defense. It's obviously not exactly the same thing, but I think it's the closest one on economic literature. For example, half of the The Chaos Theory book, from Bob Murphy, is about stateless defense.
Thanks, sounds interesting, I'll try to have a look.
If your solution relies on a cartel of miners boycotting competitors who undercut them, with nobody having a clear idea what they need to do to have their blocks accepted, I'd say you already lost.
And, what do you mean with "nobody having a clear idea what they need to do to have their blocks accepted"? Nothing needs to be done on secret, actually pool operators would better announce everything they do pretty clearly since they are using other people's resources after all.
This still gives big miners too much power in demanding draconian tx fees. Which solves the difficulty equilibrium problem, but creates a new problem. (Fees too high will reduce Bitcoin tx volume and thus the total fees collected. But I see no reason why the point with the max collected fees is the point best for Bitcoin in general. Efficiency is when you compete with someone other than yourself.)
And, also, what did I lose?
Lost in your efforts to bring about a
decentralized (as in, not run by a cartel) currency.