Topic: What happens if pools try to maximize fees by congesting the network? (Read 489 times)

I was remembering the term for that person, who knows all the doors to bad portals/methods but still chose to go against them, Like a white hat hacker. So that i could call you that. But then i looked at your name an you already saying blackhatcoiner. Well, you raised a great point, TBVH, i had no idea of artificially increasing the pool fee by making a single group just like many shops in the market grouped together and artificially or by protest, want to increase the price of some goods.

Well, i went curious now and i have to do a short research about it and i will try to cover an article on it too. But for now, thanks for the new topic to keep me busy.

Well, you are suggesting, that miners if collude to manipulate fees then why do fee payers can make collude and come together at a single point, so that they only pay a fixed fee, in that way, people can also manipulate the market fee because then miners have to validate those transactions. But AFAIK, still in both scenarios of Miner Collusion and Fee payer Collusion, both need solid connectivity in between them and they are totally decentralized and anonymous to each other then how can 1 contact another, so that they could convince him/her to collude? Well, the possibility of this happening is very low because in this way those pools will lose the percentage that you aforementioned because those who value the BTC and BTC blockchain will leave those pools and as a result, their holding of 69% will decrease.

So everyone who's part of Bitcoin, one way or another. So mining pools included.

You can't kick anyone out of a censorship-resistant, permissionless network.

Completely agree. That's why I made this thread. I just don't think it's entirely against their benefit to pretend there's network congestion.

I'm sorry for not making it clear, but what makes the Bitcoin community includes the developers, the miners, the economic majority, and our fellow users.


I don't think it would be OK for the majority of the community if mining pools themselves turned into dishonest operators in the network. Kicking them out would easily get community consensus.


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The Game Theory in Bitcoin revolves around incentives. It's what makes everything in the network stick together.

Before actually colluding, the pools will be asking themselves, "Would it be worth it to risk long term incentives for a few moments of high fees"?

Yes, but undermining the system their own wealth relies on outweighs the advantage of controlling which transactions are allowed in, apparently. Also, attacking the Bitcoin network can happen for a temporary time, because the miners will switch pool, and it will have serious financial damage to whoever attempts to do it. I don't hold my breath that the same applies if they pretend there's network congestion.

The "community" can't kick mining pools out of the network, only revenue-sharing miners who are mining at their pool can do that. But the problem is, why would they have the incentive to do that, if they too are earning a bump in pay rates from the increased transaction fees?

Ultimately, the game theory design of Proof of Work only includes miners as participants in this game, as how it was envisioned in the whitepaper. So for full node users to wrest control of fees, they would need a second layer to govern. But however it ends up, it is certainly much better than using PoS (where only exchanges and rich entities have the absolute power).

The end-result would still be the same. The community will kick them out of the network, and it would have been better for "those attackers" to be just honest and be paid in Bitcoin. All that money spent for buying ASICs and to pay for electricity = absolutely wasted.

Theoretically, yes, major mining pools could orchestrate such a scheme, artificially inflating transaction fees. But, lets pull back a bit and examine the broader landscape.

This strategy would be tantamount to shooting themselves in the foot. Sure, they may enjoy a short-term windfall from higher fees, but what about the long-term implications? Higher fees could discourage Bitcoin usage, possibly damaging the very ecosystem they rely on. Not to mention, any noticeable shift in transaction patterns could raise alarm bells among observant network participants.

Moreover, such a tactic would require a level of cooperation that's practically unrealistic. Remember, these pools are competitors in a cutthroat industry; the incentives for defection are strong.

maybe for a while pools are happy that there is congestion on the network because the fees are going up, but this is only temporary, it will not be possible for them to maintain this for long considering that it will take quite a lot of resources for them and with increasing transaction fees will also discourage people from using bitcoin and that will disrupt the market.

so even though they want the fees on the network to go up so that the rewards they get are also high, they also have the thought that this will slow down the adoption of bitcoin and annoy people on the network, for example like in the case of yesterday's Ordinal where Bitcoin fees didn't make sense and pools seems to be enjoying this.

I think someone or people who are smart enough to to control that much hash rate won't be too dumb to know that this won't be economically viable long-term unless they aren't motivated by profit but to attack the network.
If that happens, many "customers" will likely go somewhere else where transaction is cheap or stop using the network all together and demand will reduce making the transaction fees to become low again... This could happen in just two weeks. Will they be willing to risk more than 1month of low demand for just 2weeks of illegally hiking the fees?

If 69% of the hashpower is going to successfully collude to control which transactions are valid and which aren't, then there is no need to waste time and effort spamming the network with fake transactions. With more than 50% of the hashpower, they have full control over which transactions are in blocks and which aren't.  They can simply choose the transactions that pay very high fees, overwrite any block from any other pool or miner that doesn't do the same.

I don't believe that there's only a "few people" who want to acknowledge it. Mining pools are centralizing, but it's part of the evolution of the participants in looking for more efficient methods to do their job for the network as well, like the development of ASICs. It's unpreventable, especially ASICs.

But there are developers like Matt Corallo who is developing BetterHash, which would give back the miners control over their hashing power, and pools would be mere coordinators and distributors of mining rewards.


It wouldn't be that simple because everything is about the incentives and being incentivized. Would a group of miners/pools really want to attack the network and risk to be kicked out of it? Or would they prefer to be honest, keep mining Bitcoin, and be rewarded for it?

Your topic has certainly identified a key weakness in Bitcoin's centralisation as a network. Few people want to acknowledge it, but even the idea of "mining pools" as a concept is a form of centralisation that was controversial in the early days and still remains a threat today, with a few pools holding the majority of the hash power as you pointed out. All it would take is collusion either way for malicious activity. The one reason pools became accepted and popular is because they were more profitable, as well as obviously allowed access to the market for individuals with low hash rate that would rarely ever gain any block rewards otherwise.

It all reminds me how Ethereum has recently become centralised, whereas the system was designed in an attempt to further decentralise it. Whereas similarly there are just a few pools that dominate and could easily collude for malicious activity. Maybe people don't like the comparison, but given how much maxi's accuse Ethereum of being centralised (rightly so), they do so without looking in a mirror over Bitcoin's centralisation.

Sure, but with majority of hash rate, you'd expect to mine yours more often than the rest of the miners. But maybe you're right; maybe that risk outweighs the benefit, it's just seems to me that in times when the network is clogged up, raising the high fee by a lot could outweigh the risk.

Parents don't need to be large at all. Think of a parent that is double-spent, whose children are Ordinals.

Don't free market principles apply to frankland-utopia?