Topic: why still so many blocks with 243kB? (Read 1658 times)

Yeah, what many people fail to realize is what is considered Bitcoin speculation is largely investors paying miners to run the payment network, so it's a very real investment, not a Ponzi scheme. Miners never did anything for free, whether the transaction is free or not.

In comparison to the 25BTC coinbase, all transactions are essentially 'free' - so saying it comes down to orphan risk; it's more complicated than that.

If it came down to minimizing orphan risk due to propagation delay, all miners would mine empty blocks. While we do still see that occasionally, miners also realize that for bitcoin to grow and prosper, and for their horde to increase in value, they need to do a good job actually including the majority of pending transactions in their blocks.

So I think it's more a result of miners "doing what they think they are expected to do" - and also to some extent miners running the software they are given to run. The result is that 0 fee transactions get delayed, because miners believe they're fulfilling their end of the bargain. There's a lot of game theory that keeps the system running as smoothly as it does.

The core team has done a lot of research into block size and propagation delay, and if I understand it correctly, the problem with larger blocks is it will ultimately lead to centralization as mining pools end up co-location and anyone outside the data center gets put at a disadvantage.

Yeah, that's the implicit consensus I talked about.

Another thought: maybe a flexible system  for free transactions based on fees collected can be put in place? A miner can promise to include x more free transactions if the fees expected from paid transactions could pass a certain threshold.

Well there is no consensus on a quota.  Most pools simply recognize that including "some" no fee tx is worthwhile.  It ensures that (other than low-priority tx w/ no fee which may not even be relayed) that all tx will "eventually" be included.  However if you look closer at blocks they vary rather significantly on how many free tx are included.   

The only consensus really is that at least for the current time "some" free tx should be included to keep the network moving.   

Thanks, but what if there is a network consensus on increasing the free tx quota? You know, pools can also reduce the quota or effectively reject all free txs and reduce their orphaning rate as well, yet nobody does it, so there is already some implicit consensus in place. And Eligius used to(still maybe) realy transactions for free, and it doesn't seem like they run into any real problem.

What leads me to ask this question is the kind of "my 300 BTCs transaction has been in limbo for a week" post which pops up once in a while, not sure if it justifies the cost to come up with any solution to mitigate it, or if increasing the quota will have any benefit. But right now it really does seem that the maximum tps of the network is decided by some other factors than the fee so at least blocksize should not be a worry, thinking naively.

Of course you can put as many free tx in a block as you want.  1 more, 100 more, 1,000 more up to the 1MB limit.  However the larger the block, the longer the propogation delay.  The longer the delay the higher the orphan rate.

Once again miners certainly "can" include more free tx but doing so would result in less net revenue.  How much less well only a large mining pool experimenting (in a very cautious way) by comparing rate of orphans to size of block would know for sure.  Others could analyze from the blockchain but it is harder to get a clean comparison.  

Still miners have no real incentive to try an push the orphan limit for free tx.  1) it just encourage less paid tx and 2) it increases the risk of orphaned blocks (which is worth 0 BTC) how much more is debatable* but it most certainly is more.

* meaning is it that a 500KB block vs 250KB block results in a 0.1% increased orphan rate or 1%.  That might not be known but if it is >0% then adding 0 additional BTC simply results in less revenue.  (25+x)*y% < 25 where x=0 and y <100%.  Now if x is >0 then there is an equilibrium point but where the increased size warrants the increased risk but if x =0 you are just risking more orphaned blocks (loss revenue and higher volatility) for literally nothing.



That will never happen and likely shouldn't.  However as the subsidy continues to decline and tx volume rises fees will become more and more important.  Many pools simply keep all the fees now so members of the pool don't really care one way or another.  However after the next subsidy cut when a block is worth 12.5 and if tx fee volume quadruples to 2 BTC per block fees starting becoming a sizable portion of a miner's revenue.  I would expect mining pools to provide data like average fee per block and miners will gravitate to various pools which meet their risk/reward ratio.  One pool may just scoop the largest fees and keep blocks small.  Sacrificing some revnue for reduced volatility.  Another pool may scoop every tx with a fee greater than 100 satoshis to pull the maximum revenue (and maximum volatility).  

As fees, block size, and orphans become more important I imagine the number of free tx accepted will likely decline (or will only occur during periods of low tx volume).  The fact that miners accept ANY significant number of free txs is merely a distortion of free market caused by the subsidy.  As the subsidy declines the effect of that distortion will decline as well.

I agree, but I did not want "freebies for everyone", rather I am trying to know if it's feasible to increase the free transaction quota to somewhere like twice as big as it is now, and whether the benefit of such a move would justify the additional burden on miners.(It may very well be not but I want to see some analysis) Coz you know, right now we are nowhere near hitting the new blocksize limit, it's not like the paid transactions will get delayed in any way.

And obviously a mining pool should not risk to do it alone, if it's to become a reality, there should at least be some network-wide consensus, so everyone takes the same risk and it evens out.

Huh? I never had a problem with your tone, but who will not be confused when someone seemed to respond to you was actually responding to his own imagined person? Consider how utterly irrelevant your post was to my question.

Yeah, keep on making assumptions about others without addressing the real issue.  Miners never did the job for free(like the government never provided you with free medical care, your taxes paid for them, in this case the Bitcoin buyers), not to say miners have adopted pretty much the same fee policy even when the block reward was not halved.

And when did I say miners do not accept free transactions? The question I asked is why miners would sacrifice the possibility of potentially significantly more convenience(yes, the block space is nowhere near the limit yet!) for a tiny bit more of revenue, but seeing how you completely fail at ever forming a proper argument, it's no surprise you are not capable of answering such questions.

Actually, it has everything to do with what you said. You were the one who brought up my tone. You were the one who tried to defend your actions with questionable logic. For the record, I did make a reply to the point. It was in the post you quoted from the beginning. My remark about your tone was merely an add-on to my reply.

bonus: https://en.wikipedia.org/wiki/Et_tu_quoque

Their revenue in terms of bitcoins halved. If you were doing something for free, and you did a really good job at it, why on earth would you do it for free? Even satoshi's paper stated that transaction fee would replace the block subsidy as the main source of revenue. According to your logic, miners should never need to rely on transaction fees, seeing how higher market prices can swoop in and save them.

Actually, the miners are more generous than you think. They do accept free transactions. My past few transactions all have zero fees attached, but they were confirmed without issue. Often within 5 blocks. I even managed to send an "illegal" transaction with the NFTF patch and it got confirmed the next morning. Clearly, miners aren't as greedy as you think they are. It's just too much people competing for valuable block space.

You are ignoring the increased orphan risk.  An orphaned block is worth exactly 0 BTC.  If hypothetical Joe miner can collect say 25.5 BTC with 0.5% orphan risk why would he then scoop out thousands (and yes sometimes there are litterally thousands) of no fee tx so he can still collect only 25.5 BTC but now with a 1.0% orphan risk.

More work for less net revenue?

Now, your original post was strictly about me personally ,and had nothing to do with what I said, I did not say the transaction fee is not cheap, just that why should they bother to charge it when they can include it for free, and it's you who did not respond with anything of substance or to the point.


You know the transaction fee is nothing compared to the mining reward, right? 0.5 BTC is about the maximum you will get for a block atm.

And at no time was their revenue halved, other than a short period when the fiat price of bitcoin was around $60-the price was only more than $30 for a very short while before Nov.2012 when the reward was halved. Not to say that most of the miners never got the chance to set transaction policy.

That doesn't change the fact your response revolves around my tone. Also, "level 5 rebuttal" is a really rosy way of looking at it. To put it in perspective, it's the third lowest tier, and only above ad hominem and name calling.

Their reward got cut in half. You really anyone would be ok with their revenue halved?

Even if you think a level 5 rebuttal is OK, I believe my tone was pretty reserved, not like that I complain or something.

And I didn't say the 25 BTCs reward is to provide free transactions, I was just surprised that miners still "care that much" about transaction fees when the 25BTCs reward is worthing a lot already.

see: "Responding to Tone" https://en.wikipedia.org/wiki/File:Graham%27s_Hierarchy_of_Disagreement1.svg

Also, your assumption that 25 BTC subsidy is to provide free transactions is false. The 25 subsidy is exactly that: something to bootstrap the miners when there aren't enough transactions. There are plenty of transactions now and the subsidy has been halved already. Miners are under no obligation to include any transaction for free. Users should get used to the idea of paying (a fraction of a dollar) for fast confirmations.

that is being worked on: https://bitcointalksearch.org/topic/decentralizing-mining-with-pooled-solo-mining-221164

Hmmm, yes, maybe it's a good idea to set up a pool which not just distribute shares to miners, but also give them the voting power when it comes to transaction policy? Otherwise I may want to relay transactions for free, but I couldn't even produce any effect without investing hundreds of thousands on equipments first.

Why some people insist on taking things to a personal level is beyond me. Who said it has anything to do with "me"? Otherwise why should I be surprised?

There is an interesting psychology around tx fees.  I think people get carried away with the "power" of being able to choose their own fee and get really stingy with a few US cents.  If we start getting closer to the hard limit, or even self-imposed lower limits, people are going to have to pay for that scarce block space, much more than a few cents per tx.  It may be a little OT for this thread, but I think that should happen for at least awhile, rather than raising the block size at the first sign that the old one is getting filled.

I (and just assuming here) think it is more the potential loss due to orphans.  Let hypothetically say a 1MB block has a 1% higher chance of being orphaned than a 250KB block.  To avoid losing funds (relative to just mining 250KB blocks) one would only produce a 1MB block if it produced 1% more revenue.  Otherwise the miner is operated as charity.  Accepting lower revenue (and potentially losing hashing power to more competitive pools) in order to subsidies free users.  Now looking at blocks almost all miners DO include a certain number of high priority tx (i.e. not dust spam) with no fee but they cap that amount.  The amount is likely a balance between being altruistic and maximizing revenue for current block (and damaging reputation of Bitcoin).

Still the long term solution is for more users to include (even very small) tx fees with their txs.  If a miner can earn 2% more by mining a 1MB block and that will only result in a 1% increase in orphans rates then miners are leaving "money on the table" by not picking up those transactions.  Eventually some or all miners will and those who won't will be less competitive and lose hashing power to those who do.  Note: miners is the entity creating the block, most "miners" are nothing of the sort they are just selling hashing power.

In my experience even 0.0001 (per KB) is good for inclusion in the next block most of the time and that is ~1 penny. 

Are you really so cheap that you can't afford a 13 cent (0.001 BTC) transaction fee? 0.001 BTC is enough for most transactions to get into the next block.