Topic: Who is paying very very large fees when not needed and why? - page 3. (Read 1074 times)

i remember this a couple of years ago when some people were actually discussing how to implement fee estimation based on the last block that was mined. it was based on the average fee that the block had, like saying min fee is the minimum fee in that block and average is the median fee, etc.
but i don't think we can make a conclusion that this is the case with the transactions you saw because it may easily be something like a gambling site paying its gamblers as they cash out with a higher fee.

I made a comment elsewhere but it seems to be valid that it looks like there are some wallets that are responding poorly to other high fees.
Last night when the mempool was almost empty there were transactions coming in that were 1 or 2 sat/byte. Once there were a few transactions that had a fee higher then the needed one the fees started to go up a bit closer to 4+ sat/byte. Even though the mempool was empty.

It was almost like the wallet was taking an average or something of what was in the block instead of looking at the fees.
Could be a bunch of lazy programming. Almost like adding the highest 10 fees that should you see going into the next block and add them to the lowest 10 fees you see going into the next block and divide by 20.

-Dave

I can assume that among those who pay groundlessly big fee for their transactions are  those people who sporadically  use ^coinb.in This wallet  requires some preliminary knowledge on the setting correct change address/es and amount of BTC to be send there. If all of that were not set properly all transaction change would go to  miners as their reward.

coinb.in is more like a web tool than a bitcoin wallet though and it demands a certain level of advanced users who pay more attention to what they pay as fee in their transactions. besides i don't think that many people are using this tool to begin with.

I'm not sure this is necessarily the case.

Take a look at the following address, for example: 1NDyJtNTjmwk5xPNhjgAMu4HDHigtobu1s

We know this address belongs to Binance, as they stated in this tweet: https://twitter.com/binance/status/961666467325358081

Now, if we look at the transactions out of this address over the last several hours, we see they all pay around 100 sats/vbyte when 2 sats/vbyte would have been sufficient, they are being mined in almost every block regardless of the pool finding those blocks, and there are a number of unconfirmed ones visible, meaning they are obviously being broadcast normally. So these transactions at least are just Binance needlessly pushing the fees up. I have no doubt there are a handful of transactions being paid to their own pool as you state, but I think such transactions are very much in the minority.

Once the government gets a single copy of malware, they can blacklist the address the malware is sending coin to. If the malware were to update the address based on the date, the government could simply infect a decoy computers that have system dates in the future. If the malware were to query a server with the address to send coin to, the government could use a decoy computer to learn the address that coin should be sent to. The latter is less ideal for attackers because it will increase the time it takes to steal coin, and makes it more likely that countermeasures will detect malicious activity, and cutoff internet access to the infected machine.

All of the above is hypothetical and is likely not the reason for the transactions noted in the OP. The transactions in question are almost certainly being paid to the pool operator. This could be described as similar to someone taking money out of their right pocket and into their left pocket. There have been discussions in the past about miners taking payment in order to confirm a transaction that would not otherwise normally get confirmed, but I don't think there have been discussions where high transaction volume businesses receive payments for providing high transaction fee transactions.

In which case, miners leaving China may be an even better thing for bitcoin than expected. Let's hope they don't all come over here and then get hit with even more ridiculous requirements like the ones OFAC wanted to enforce.

Are there any data regarding why transactions were being blacklisted or the criteria which were being used?

This would be fairly trivial for a scammer to circumvent. The Electrum malware, for example, could simply be updated every day to use a different address, just as they were constantly updating the web address which was displayed in the malicious message they sent to users. They could have the malware connect to a server and fetch a brand new address every time.

Still, I take your point that scammers will use a huge fee with RBF disabled to ensure that their stolen funds make it to their wallet ASAP with minimal chance of intervention from the owner of the coins. We've got to assume that such transactions are very much in the minority though, and do not explain the vast numbers of grossly overpaying transactions we see.

Is there any proof of this I can study. For example what were the transactions they rejected why and who picked them up?

It won't just be the "price consequences" for their business, if majority of hashrate try to maliciously attack bitcoin (which censoring transactions is an example) either bitcoin dies or the community takes drastic measures such as a hard fork to brick their ASICs overnight.

Based on ds5000's post, and based on known criminal uses for bitcoin, I would think the blacklists probably relate to addresses that often receive coin via malware, meaning that criminals try to infect others' machines with malware that will send coin secured by any private keys it finds to address 3xxx...x, and 3xxx...x will be the blacklisted address. From the point of view from the malware creates, they would not want to use RBF transactions so it would be more difficult for the legitimate owner of the coin being stolen to create a competing transaction that would prevent the loss of their coin.

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To get this thread back on topic, I would point out that block 688970 was mined by the binance pool, and the transactions paying crazy fees are likely associated with binance. I might suggest this means that binance was testing their pool software and did not effectively actually pay 2200 sat/vByte.

As far as I remember, Schnelli confirmed blacklisting only for Bitmain pools, which make up ~20% of the current hashrate, but said it was due to requests of the government. So it may apply to all China-based pools, thus my 50-60% estimation. This percentage may however have declined due to the miner flight out of China (after all, chinese mining farms tend to use a chinese pool, too, or to be directly controlled by Bitmain etc.).

If they have the time and tranquility to stay rational. They may be on a hurry, and in the case of bigger thefts, maybe not having even reliable (and safe/private!) Internet connection because they're hiding somewhere. Again, the high fees may be avoidable for them, but I could perfectly understand if they chose a significantly higher fee than normal as consequence of their sense of urgency or panic to get their txes included as fast as possible. this does of course not mean that I'm in favour of any kind of criminal activity ...

This is of course possible in a "dystopian" scenario where blacklisting pools form a cartel and only accept blocks of their peers. I think however miners and pool operators would like to avoid that unless their governments explicitly required it, and even moving to other countries before taking that extreme measure, because this would eliminate the "uncensorable" attribute Bitcoin benefits from, and thus, probably would have severe consequences for the Bitcoin price (and thus their own business model).

Also very true. We discussed this before when MARA pool were still mining their nonsense "OFAC compliant" blocks, although rejecting other blocks is a step above refusing to mine certain transactions.

It depends, I think, on why the transactions are being blacklisted and the percentage of hash power which is doing the blacklisting. 51% blacklisting because of government rules? Then I would suspect a chain split. 95% blacklisting? The remaining 5% will almost certainly fall in line, since the minority chain they are mining will rapidly lose value, and with it, their incentive to keep mining it. However, the day when the network starts unanimously deciding to blacklist certain transactions permanently, is the day bitcoin is no longer a peer to peer currency without any trusted third parties. Let's hope it never comes to that.

If blacklisting pools own 95% of the total hashrate, they can simply reject the blocks mined by the 5% non-blacklisting pools too.

Let's say my transaction is rejected by blacklisting pools and it's included by a non-blacklisting pool.
Most probably, the 95% blacklisting pools won't add any block to the chain including my transaction. We will have a hard fork, then? Or maybe even non-blacklisting pools will join the blacklisting pools and will add the new blocks to the longer chain?

As far as I am aware, blacklisting pools make up a much smaller percentage of the hashrate than that. And even if we reached the point of 95% as you suggest, then the logical option for such blacklisted users is to simply enable RBF and broadcast at a fee within 1 vMB of the tip. If they don't get confirmed for several blocks and the fees change markedly, they can bump their fee with RBF. There is no need for them to be paying ridiculously high fees.

My explanation would be: If we really had the situation that 95% of the mining pools (better: the mining pools with 95% of the hashrate) were censoring transactions coming from blacklisted addresses, then it becomes crucial for the blacklisted entities to get included into any possible block mined by the remaining 5%. They cannot know how the evolution of the fee will be until the next block found by the few non-blacklisting pools, so it would be rational to choose a higher fee than the current "high priority fee", perhaps as high as the highest "threshold" in the last 24 hours or so, i.e. the block whose minimal fee for inclusion in the block was highest.

But as I wrote in the second paragraph, I don't believe we have this situation currently, blacklisting pools may make up perhaps 50-60% of the hashrate. Instead it could be a mix of high margins (of the criminal activity) and a sense of panic/urgence.

All of the above. Exchanges tend to start the process since they just pay the same ridiculous flat fee all the time, but other people not paying attention is what perpetuates the cycle.

I actually don't think this is necessarily a bad thing. Lots of users incorrectly think of fees as a total amount, instead of a rate. Saying "I paid 10,000 sats in fees" is a meaningless statement without knowledge of the transaction. People paying 10,000 sats for every transaction, think that is a "fast fee" will result in some being vastly underpaid and others being vastly overpaid.

The reason is that many people use a multi-currency wallet to store as many cryptocurrencies as possible, and those wallets are poor in estimating fees, and many users focus on the speed of transfer rather than paying lower fees because they mostly use Bitcoin for speculation.

These wallets are evolving in terms of accepting more coins and not in making fees looser because it is not what users want.

I'm not sure what rate you have in mind when you say "ridiculously high fees" but this makes no sense!
1) If they pay a high fee (like 1000 sat/vbyte for a 10 sat/vbyte priority) it won't affect the decision of the mining pools. If any of them is ignoring the transaction they will continue ignoring it and the rest will see it as a high paying tx no matter where it is coming from. In this case if they pay the high priority fee (11 sat/vbyte) it will have the same exact effect!
2) If they pay a very high fee (like 0.1-1BTC) then it may start affecting the decision of the mining pools, for example the one that is ignoring the transaction will have enough incentive to change their mind.

Apart from a handful of transactions in second group (which were never linked to anything criminal AFAIK and were most probably mistakes) the rest are in group 1.

Some weeks ago I listened to an interview with J. Schnelli (core dev/maintainer) and he suspected this may be an issue. It seems that some Chinese mining pools like Bitmain (not only the infamous Marathon pool) already use black lists for some addresses they relate to criminal activity, reacting to requests from the government, and thus some criminals broadcast their transactions with ridiculously high fees to be included within the next block not mined by one of the "blacklisting" pools.

It may be more an effect of these people "panicking" than a real necessity of them, because blacklisting pools are still not the overwhelming majority, so with a high, but "normal" fee even a blacklisted entity should get confirmed their transactions in a few blocks.

This may however not apply to the transactions the OP linked to.

Cheers to the miner who confirmed it. 

So whose fault is it? Exchanges? People who blindly follow them? The developers who coded algorithms of falsely fee estimation? There are even some wallets that don't show you what's the total amount of coins you'll pay in mining fees. They only reveal you the sat per byte which won't assist the average user. 

Then you have another problem to face; most of the exchanges haven't adopted SegWit native yet, which makes their users not doing it too.

I can tell you from first hand experience that "mistakes" does happen, because I have paid huge fees, without even noticing. I have swept a Paper wallet with 1 bitcoin once and paid $1000 in fees. The fee estimation on some of these wallets are crazy and you have to double check your fees (convert it to Fiat currency value) to realize how high it is.

Things like this happens when you are in a hurry and you just accept the default fee settings and when you check your balance, you realize that $1000+ was charged in damn fees.