Topic: Why I support Jeff's BIP100 - page 3. (Read 10572 times)

Yes, this is roughly what I'm arguing.  Growth is great but if we run into a problem with real resources then we'll need some kind of upper bound (or else mining centralisation).  So long as real supply is much larger than the "ideal supply" being calculated by BIP100 then things should work just fine.


Wow, sounds pretty wild.

My intuition is the other way around.  I expect humanity will demonstrate an apparently insatiable appetite for blockspace, just as it has for storage and bandwidth.  I myself could use 50 GB of blockspace were the price low enough.

I could be wrong.  It might be that block space becomes so vast and cheap that human desire simply can't keep up.  Block space would be as plentiful as air.  In this world, BIP100 would work fine but I'd still question the point of it.  Why, for example, would we want to artificially restrict the atmosphere to create an air market?  All I can think of is that without a fee market, transaction fees would tend to the largest miner's transaction-processing costs and the network security afforded by the fees would tend to zero.

The small miners can get kicked out of the market by a single or minority of miner which made a huge big blocks.
Also, BIP100 does not prevent a small miner to make a small block either, it only limit how a single miner can kick with big blocks.

Isn't your's also ?

If there is one or zero does not change a lot since only the average size count.

I don't get why you are so sure BIP100 allows cartel while 101 does not. It is actually the reverse with big blocks a big miners can kick the small one out of the market.

Exactly.  BIP100 can handle demand spikes as well as any other block size limit method (except arguably Meni's).  BIP101 has no principle advantage here.


While a fee-market focused limit might make reserve hashing power more commonplace, I fail to see why this in itself is a good thing.  Certainly, it is better to counter a surge with fast blocks than to not counter it at all.  Better still though would be to mitigate the surge by just having bigger blocks to begin with.  This way, people get their transactions confirmed even more quickly, and for a lower fee!

In a BIP101 universe, surges could be handled in the same way.

Yes, under BIP100 the blocksize limit could be very large if demand is large.  With respect to resources an upper bound could be in place for technical reasons.

Many BIP101 proponents make comments like "In 20 years your watch will be able to download the whole blockchain in seconds".  I have no idea if this is correct, if it is then maybe the technical limitations may become insifgnificant in relation to the market driven blocksize under BIP100.  This is why I think the stabilizers (on both sides) could be removed in the future.

Have you checked BIP 1xx ?

No it's different, no miner is obliged to use bigger blocks, neither BIP100 or BIP101.
The miner can always chose to make smaller blocks than the actual version of the protocol can support.
It is NOT true the opposite.

The BIP100 can cut the possibility of some good miners to spread bigger blocks if the network can support them, because a minirity/cartel has chosen to.

This is an assumption.

This is true, but still there will be the space that someone can try to cover, with BIP100 it is NOT, the BIP100 can cut this possibility, because it opens an easy way to make cartels of miners.

BIP100 can increse the block size in 12 months to 32MB, by doubling it every 3 months, still it can cut the size, and this is the real problem.

BIP100 is likely to result in blocksize increases quite quickly at first, because when the block reward is high as there is little reason to vote for a lower limit, this should make it similar to BIP101 in the early years.

As time progresses and the block reward falls, if the network is fee driven it is likely to be able to handle short term demand variations much better, for various market driven reasons.  BIP100 can handle longer term variations.

For example if demand is high during peak shopping hours in the US, or at Christmas, the mining industry can allocate more power to mining and find blocks faster.  This is similar to how the national grid operates at the moment.  In the UK, when the national football team play an important match, at half time millions of national grid users make tea.  This causes a surge in power demand, however electricity producers predicted this in advance and respond by producing more energy.  Large amount of potential energy stored up in hydro facilities can be realized in one go, so the UK population can make their tea (http://news.bbc.co.uk/1/hi/uk/5059904.stm).  Bitcoin miners could also respond to demand surges and release large amounts of energy to increase their hash-power, temporarily producing faster blocks.

If we do not allow a fee market to exist, amazing features like this may not occur.

What if the price elasticity of demand asks for a very high supply (i.e. Bitcoin takes off in a big way).  Will a miner vote for a block size limit that he himself does not have the resources to handle?

It seems like the BIP100 algorithm is trying to set a kind of "ideal supply" that would work well for the current demand.  What if we don't have enough resources to supply the "ideal supply"?


I agree (and this is a cool corollary of BIP100).  But notice that miner's are voting for lower block limits because demand is low.  What happens when these entrepreneurial miners correctly estimate that S * P is maximised at a point where S is very large?

You can reverse the argument with BIP101.

"BIP101 cut the competition between miners, so if there are some miners that are not able to spread blocks with higher size and faster, they will be obliged to, because a cartel between miners, without risking so much, just push bigger blocks"


Isn't it also the case with BIP100 ? if there is demand, miners will try to cover it thus increasing the size.


Even with BIP101 you can't be certain that miner will not adopt a small limit instead of a bigger one, so it change nothing.

The only valable argument I think of for BIP101 is about short term peak demand that BIP100 can't adapt for quickly. But this is an exceptional case.

We are talking about how miners should set supply, we do not need to measure supply to do this.  What we need to measure is the price elasticity of demand and then set supply accordingly.  BIP100 encourages miners to do this, at first they may be poor at doing so, but over time miners will improve.



Miners may also have an incentive to vote for a lower limit, probably not in the first few years, but once the block reward is low they may vote to maximize revenue.  This would happen depending on what miners think about the price elasticity of demand.  Basically it depends on the demand curve, if reducing supply from S1 to S2 increases the price from P1 to P2, such that S1 * P1 < S2 * P2, miners should vote for a lower limit.

Illustrative demand curve with supply limit

Notes: Where the yellow and blue line cross is the equilibrium price, miner revenue is the area formed by a rectangle between this point and the point 0,0.  Miners can vote to lower the limit, if the demand curve is steep enough then revenue will increase when the limit falls.

Yeah, I feel I could have been clearer.  Sorry if I mislead anyone.

I can't imagine demand for 1TBs worth of block space every 10 minutes but I believe that if we had the resources to provide this at very low prices that people will find a use for the space.

Lots of crosstalk then in this discussion, but I'd be very happy if bitcoin became so popular that we had 1GB of transactions regularly... Not sure where we'd find 1TB of transactions in a year let alone every 10 minutes, real or spammed.

Not now.  Of course BIP100 won't lead to instant disaster.  Even with no block size limit we'll not see a 1GB block anytime soon.  I argue simply that without a ceiling BIP100 will tend to miner centralisation in the long-term.

Without the 32MiB limit, I would expect a BIP100 limit to grow more quickly than a BIP101 limit (even were they both set to start at 8MB).

So there is not problem to take away any kind of limit
None is going to use 1TB blocks (and not even 1GB now)

I'm aware of pools.  I've had plenty of experience both mining solo and mining as part of a pool.

Perhaps you missed that I was responding to jonny1000's notion of eventually removing BIP100s stabilizers (the 1MB and 32MiB limits).  No matter how big the pool, there is a limit to its resources.  1MB blocks may be trivial, but 1GB blocks wouldn't be, and 1TB blocks would be out of the question today even the largest miner.

Again there is no such problem. I suspect you're unaware of what the mining scene is today. Virtually no miner mines for himself with his own node any more. All the mining nodes are at the pool end and pools will in no way have any difficulty storing large block sizes.

Local node sizes will only affect regular node users who choose to stick with bitcoin core or a full blockchain application as their wallet - miners will be unaffected.

Part of a miner's costs is in maintaining a full node.  With more transactions, these costs increase.  If a miner cannot make enough profit to cover its costs it must go out of business.

It is very possible for a block size limit increase under this scheme to push miners at the bottom end out of business.

There is no such problem. Miners voting at the bottom end will simply have their votes ignored. It has zero effect on their ability to keep mining.

The way I see it:

• BIP100 measures demand
• BIP101 speculates supply

I believe both have problems and that we'd ideally like something which measures supply.

The political philosopher in me doubts that Bitcoin will remain sound in the long term if it regularly requires protocol updates to correct past speculation (Official Bitcoin protocol organisation).  The economist in me doubts that Bitcoin will remain sound if the artificial capacity limits are driven by demand (miner centralisation).


Interesting idea to grow both bounds.  I must admit I've not been paying much attention to the lower 1MB bound.  I guess there's a potential 21% attack that a growing lower bound could help mitigate.

In the long run I don't think the upper bound can be safely removed without significantly changing the algorithm.

As demand increases, there will be pressure to increase the limit (to increase supply).  So long as miners can cope with the increased demand they have an incentive to vote to raise the limit for greater profits.  This is all well and good; we want these free-market efficiencies.

However, the algorithm itself pays no attention to the level of decentralisation.  From BIP100:
So if 80% of the mining network wants to meet increased demand by supplying larger blocks and 20% of the mining network wouldn't be able to cope with the increased demand then this 20% will be driven out of mining.  We'd be slowly boiling a frog.

Yes, in particular I don't like speculating about demand for the next 20 years (as well as bandwidth).


I would be happy to support BIP100 with Sipa's proposal as a lower bound and BIP101 as the upper bound.  In the long run it could be better if we remove the BIP100 "stabilizers", of both the upper and lower bound, once we can rely more on the voting mechanism.