Topic: Mining for fee only is unsustainable. (Read 3967 times)

lol.  We have reached the point in bitcoin's development and popularity that we get attacked by hoards of bitnoobs.  But still haven't hit the knee of exponential growth rate yet...

but surely someone still has to do something and could benefit from advice and discussion from us.

I propose "do nothing" approach. Let miners decide how much they want to charge for transaction inclusion into the block.  And also let users to decide how much they want to pay.

At the same time there is nothing wrong with having some "recommendations" from software developers or community. I, for example, personally, at the moment perfectly happy running official client with default rules.

cartels also face regulation in many jurisdictions. i have been continuously surprised in past dealings at how often antitrust regulation becomes a potential issue. (i'm not saying that as a critique of antitrust laws, nor an endorsement, just a descriptive point about my history with the legal issue.)

the issues are complicated here, however, and just to say 'let the market handle it' works at too high a level of generality. what specifically is the 'market-neutral' approach to fee-handling you would propose here, vladimir? probably it would require a change to the protocol as mike mentioned - e.g., to allow for dynamic fees within a range, or for a way to modify unconfirmed transactions in the memory pool, or for the chain itself to compute fees based on factors available to it (much as it retargets difficulty at present).

Come on! Mike! Why would we want some wise men and elders decide something, when it can be given to be sorted out to the free market. The former would be very much not in spirit of Bitcoin. Should we ask Fed to do it for us, maybe?

Though, surely any developer of any bitcoin client is free to put whatever default for the fees he sees fit. And users are free to hack it up to change it.

Miners on other hand are free to form and break cartels and include or not include "fee free", and "low fee" transactions in their blocks.


The danger here is when some mining cartel having more than 50% of mining power refuses for some reasons to build up on blocks of other miners. And this is called 50% attack AFAIK.

That's correct, and it shows why collusion is not likely: the cartel has no way to keep ALL high fee txns for themselves, and no way to keep ANY low fee txns from eventually getting into the blockchain. It seems there's no incentive to form a cartel. The miners are incentivised to pickup any transaction with non zero fee, and the users would tend to pay a fee as low as possible.

Thus, the tragedy of the commons as suggested by the original poster seems possible, and the net effect is lowering the security. A form of cartelisation could take hold however, which we could call unionisation: the members of the union would demand a minimal fee, and threaten to otherwise disrupt the network; they could DDoS or refuse connection from defector nodes that accept low fees, and ultimately split the block-chain by refusing blocks that contain low transaction fees. Additionally, the altruistic impulse of the users could kick-in, they could recognize that paying a small fee is beneficial to the network, or they might not want to be seen using the "el cheapo" bitcoin client. It would be the equivalent of ratio increase programs on private trackers.

For as long as mining generates decent revenue that's unlikely to happen though. But since mining for a fee seems unlikely to reach a Nash equilibrium point, it follows that the security of the network will not scale up with the total number of transactions, rather it will be bounded by the mining for block bonus revenue. If the current monthly revenue is 216000 BTC and miners are looking for a 5 year amortisation at 5%, then only an attacker willing to invest more than about 5.000.000BTC can overpower the network, assuming he has costs/Ghash similar to miners. In 2021 that monthly revenue would drop to 54000BTC allowing attacks for as "low" as 1.000.000 BTC

It's possible.   

Guys, can we please cut out the flaming of new people? As has been pointed out already, post-inflation security is not a solved problem and Bitcoin is not some kind of all-knowing Seldon plan that merely requires unlimited faith to work.

At this point, the "best" solution (using the term loosely) I've seen proposed is for the maintainers to pick a minimum fee and for it to be enforced by a officially-approved mining cartel, ie, miners who refuse to build on blocks containing transactions of below the minimum fee. This solution is suboptimal for a whole bunch of reasons and it'd be nice to find a better one, but that will almost certainly require changes to Bitcoins design and code.

We welcome noobs whole heartedly.  How would we expect bitcoin to become a global economy if we didn't want as many new people as we could get?

The issue WE as a community are having, however, is twofold:

1) The lack of research that goes into a post like this.  MANY MANY of these posts are about issues that have been discussed ad nauseam before.
2) The posts are worded from a condescending stance, in which the original poster KNOWS the flaw is there, and the entire community of people who have been here for two years is too stupid to have seen it.  It's also accompanied by ad hominem attacks on the people ("only an idiot couldn't see this", etc.)

Compounding both of these issues is a general pattern of poor communication skills, both in portraying their opinion (this thread, for example) and in comprehending the rebuttles that the community has offered.  THIS is the kind of new community member that we find frustrating, because some of us have been dealing with it for 2 years now.

For comparison, see how the original post of this thread could have been worded:


The community would have reacted MUCH better to this kind of post, pointing out that there's no inherent competition between miners for transactions:  A transaction can be worked on by multiple miners at once, and as a miner, lowering your transaction fee doesn't bring you any benefit:  It doesn't "bring you more customers" than other miners, and it doesn't make the block easier to solve.  Instead, we saw someone with very little understanding of the bitcoin system approaching us with an arrogant, flippant attitude (either intentionally or unintentionally).  The same kind of reaction happens in mathematics, a well known one being the problem of trisecting the angle, the millenium problems, or perpetual motion.  Many people who are introduced to the problem automatically assume they have a clever way of circumventing it, not realizing that for thousands of years people who are very likely much smarter than them have worked tirelessly on these problems, and it'll take a bit more effort on their part to make any true progress (if any progress at all is possible).

Look at http://forum.bitcoin.org/index.php?topic=12266.0

2138 is a hell of a long time from now. 

A node is any machine running the Bitcoin client that has a full block chain so that it can confirm transactions. Currently this is every computer running the Bitcoin client. As the block chain increases in size it will eventually get too large for the normal user and Bitcoin clients that do not confirm transactions or have a complete copy of the transaction list will become popular. Your assumption that cartels will form is based on two flawed assumptions

A) The cost of building a working node once Bitcoin reaches the point where the block chain is very large and the transactions/second ratio is very high will make running nodes too expensive for the average user. After looking into current hardware i have come to the conclusion that building a machine that could handle a 10tb+ block chain and more than 2000 transactions per second would be possible for about $1600, not a large entry barrier by any means. Thats with todays hardware in 5 years the same machine will be bargain bin. 

B) There is no incentive for a person to run a full node unless they run a mining pool. Even if this was true by the time we have to worry about block chain size and such the number of pools will be in the thousands maybe even the tens of thousands, far too many to collude. But this is not true, large businesses could save thousands of dollars a year by running a node/mining rig so that every transaction to business makes (paychecks etc) could be added to the blocks that their private node/miner mines thus allowing them to escape transaction fees and have the added benefit of being able to confirm transactions in house.

Simply put these "cartels" will never form because the cost for entry is lower than you think it is and there are more reasons to run a node than you think there are,  so there will never be so few nodes that collusion could ever be a serious proposition.

because, sometimes I like being a bitch?

Sometimes it is more fun to troll than to be friendly...   After all, half of these newbie posts are actually troll posts.  They never lead to a rational debate but create FUD on the forum.

If you take a troll post straight to the sewer... A: there are going to be less trolls.  B: new posters will make more effort to at-least do some research before making such posts.

that's all fine. so instead of contempt and ridicule, why not either (1) say nothing or (2) say that the original poster probably doesn't mean 'unsustainable' but only 'possibly unsustainable' and point out examples of another discussion?

Let me be even clearer, for those of you who insist on missing the point. A "node" is a part of the network which processes transactions. It is true that a person at home running a GPU mining instance is not a node. In this case, the pool is the node. This example actually makes my point more concrete: that nodes are becoming increasingly centralized and vulnerable to attack or consolidation into cartels as competition for transaction fees increases.

No. GPU Miners are not nodes Sorry. The normal client is, but then it's processing power is not really usefull.

At the moment - Miners are NOT NODES.

I'm half childish... and half bored... I guess It comes down to the fact that I have extensively researched the above 'transaction fees only' system and have come up to with two simple observations:

First:
We cannot tell where the natural fee-support of the network will be without a full game-theory analysis... that is both non-trivial, and impossible because of the wildly changing dynamics that the future holds.


Second:
'Security' is a relative term... who is to say that the network will not be secure with a extremely low hash-rate?  For example, you may have a locked up house in a bad neighbourhood, and be less 'secure' than the completely open house in a safe neighbourhood.

The bitcoin network is like that.... the free market automatically put as LITTLE resources into securely as necessary.   There might be OTHER barriers to attacking the bitcoin network in the future, so extremely low fees and unlimited block size is still counted as a very secure system...

The thing with every single thread about this system that claims that the mining fees are unsustainable make a huge assumptions on the ENVIRONMENT that bitcoin will be in the future... the fact is WE DON'T KNOW, and CANNOT KNOW!

I have always maintained that we should be focused on making bitcoin as secure as possible NOW not 50 years in the future.

A "node," in bitcoin parlance, is a miner. This issue remains unresolved.

This community will be doomed if it doesn't welcome newcomers. How else can a community grow?
Newcomers don't know all and ask questions, what's the problem?

There's been discussion on maintaining the minting of new Bitcoins before, there will be in the future.

As I understand it if the largest mining pools decided together to continue to mint 50 new BTC beyond 2012, there isn't much the non-mining bitcoin community can do to stop them. Correct me if I am wrong.

(Not that I want that to happen btw)