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In ppcoin transaction fees are not redistributed to the miners, but instead "destroyed". This destruction is compensated by the influx of new money, either through POS or POW blocks. This is a drastic change of the incentive structure for validation nodes and may become a problem, as explained in the following:

In bitcoin, the transaction fee acts as an incentive for miners to include transactions. The first goal of transaction fees is to accomplish spam prevention. The second, more complex aspect is the incentive for validation nodes: By providing a transaction fee, a validation node can earn money by including the transaction in the next block. If the block gets crowded, the validation node can prioritize transactions based transaction fees. (However, that incentive structure posses its own problems, since nodes may have an incentive to WITHHOLD transactions with large fees from other nodes)

In contrast in ppcoin, there is no direct incentive to include transactions into blocks. Thus the mechanism to determine transaction priority may vary dramatically throughout validation nodes. A person creating a transaction has thus NO DIRECT MEANS to influence the priority of the transaction. This can become a problem if the transaction limit in ppcoin is reached.

This is a QOS (quality of service) problem for transactions in the ppcoin network. Users have to be able to increase the priority of their transactions by providing monetary incentive.

Would it not be possible, to, change so that a min tx of 1c is required (as opposed to fixed at this), and then 0.1/tx is destroyed? As such, allowing clients to still give a tx fee to the validating node, if they so desire, for priority?

This also raises the issue of what kind of consensus on tx fees could possibly be reached if they are irrelevant to miners. Is the tx fee hardcoded? If so, how can that possibly work when you have no idea what a ppcoin is worth? Perhaps another $100k in development costs are required to find the solution.

I used to take you seriously, and thought about reviewing your complex designs somewhere down the road and provide help as what I can. So my mistake. I'd say good luck getting anything done with your beloved decrits now with this type of attitude.

LOL I agree with Etlase your claim of putting in $100k-$200k time into development of PPC is laughable. $100k is a really good software engineer yearly salary. You haven't even been working on it that long from what I take. And if you have certainly not likely that you put in that much time.

Stop whining about people calling out your bullshit as what you would call an "attitude".

 :D

This is inaccurate, you can still raise your paytxfee to get a better chance of getting into a block. The prioritization of transactions have not been changed from Bitcoin. 1c is the minimum required fee. If the argument is about miners have no incentive to include transactions, I think this concern is false as including transactions does not consume much resources and miners have no incentive to change the default client behavior to exclude transactions.

If transaction fees were paid to minters it would become a serious problem down the road as we described in our design paper.

Ohnoes the invisible carrot on the invisible stick, again. Learn to take a joke, brah, or don't fuel the fire.

+1 LOL this ^

I am only putting my honest opinion of the work. If you cannot take it or think the type of work in ppcoin does not worth the amount I estimated, I would say that's probably a good indication that you are not anywhere close to a true professional level.

I would also rate the programming job of Satoshi worth $1m (not including his innovations just the quality of programming) and annual programming job of Bitcoin development team around $500k - $1m as well.

If you have no idea how much is the cost of software programming for critical infrastructure work well you are probably just another armchair designers in my honest opinion.

I do. I am a software engineer. Your estimates of how much "time" you put into it as $100k-$200k is bullshit.

As I said, learn to take a joke, brah. Besides, after only being interested in your project and asking honest questions, the reply I got from you was a pompous one in a different thread. You haven't set the bar very high.

PS - There was a miner a short while back that had a significant amount of hashing power but included no transactions. There is a very real downside to including transactions and that is network propagation speed. There is an orphaned block in bitcoin every couple dozen blocks or so, so this is a very real disincentive to including transactions. However, I think you might have mentioned something somewhere about coin-days-destroyed being a factor, but I can't be bothered to remember if I am right or not, and you haven't really responded to the concerns of the thread over taking my comment personally.

Absolutely, if you don't get paid to include transactions you are wasting joules by doing so, unless enough other people are not, or you are a large enough proportion of the processing, so that enough lag in getting a transaction done is noticed to devalue the coin as not providing sufficient quality of service.

If you can save joules while still getting paid the same, you probably should save the joules.

-MarkM-

I already responded to the questions above.  As to your argument here I think it probably does not apply to proof-of-stake blocks as you don't really lose that much if your proof-of-stake block gets reorganized.

Even with proof-of-work blocks I think the concern is still minimal. I don't think a significant portion of nodes would alter the implicit network protocol contract with that type of minimal gains. Yes some extremely selfish guys may, but not really a big problem in the whole picture.

PS I just speak my honest opinions so if that time you were not comfortable with it I apologize. The other time when you critique QBC I praised you as well since your critique were quite spot-on.

Etlase2 and smoothie, why dont you guys go and try and trash another thread, or go give LTC threads some trash.

I recommend to take the discussion about the value of the design work to PMs.

on the topic:
Please help me to understand the prioritization schedule for transactions and how that can be enforced on a protocol level (as you indicated in the design paper). As far as I understand it, right now validation nodes have neither an incentive nor a disincentive to include transactions. If the number of transactions hit the transaction limit, how can a user enforce a higher priority? In bitcoin this is achieved by providing a monetary incentive to the validation nodes.
Can you think of any other means of implementing an priority system for transactions, which does not require monetary incentives for validation nodes?
 

I urge you to revise that opinion. You should always assume the worst case: 100% of selfish participants who are trying to exploit the shit out of the existing infrastructure.

Here are the minimal gains:

1) 0 joules > X joules (as markm said) - probably not a very big one as I think CPUs will outdo network growth in this area, but ECDSA verification is a very slow operation
2) faster block prop > slower block prop
3) less incentive to actually participate in the network via bandwidth costs which I think will always be a problem (this especially applies to PoS which very likely won't be pooled)

I think it's a bit more forward-thinking to address these concerns rather than dismissing them as minimal. It is hard to predict the future.

Plus you didn't answer if the 1c tx cost was hard-coded or can be changed by the protocol. If it's hard-coded, that's an awfully blunt-force way to set the tx fee. What if 1c is $1 in the future? A hard fork would be required to be competitive with other currencies.

These are two separate issues. Including transactions is default client behavior and an implicit protocol but not enforced.

When transaction volume gets to the point there is competition getting into a block, ppcoin has the same Bitcoin logic that above half megabyte region of the block only higher and higher fee paying transactions are included. This is again implicit protocol and default client behavior and not enforced.

What I mean implicit protocol is that any benign alternative client software should follow the same behavior.

Yes I understand all your concerns. If it becomes a widespread problem down the road (although I highly doubt) then protocol will be revised to correct the problem.

Adjusting transaction fee would require a hard-fork yes. I am not as strict as Gavin on the issues of hard-fork. I believe even if you design a convoluted transaction fee model most likely hard fork would be necessary somewhere else anyway.

Hey if I ask a question and there isn't an answer to it besides bullshit propaganda I will keep asking the question.

Obviously your "leader" sunny KING doesn't know the average salary of a software engineer in making his $100k-$200k  appraisal of his L33T programming skills.

Seriously even Coinshiiter talked so highly about how much he was paid as a software enginner/programmer.

AndyRossy, if you don't like it keep crying okay?

Thanks

Your best friend,

Smoothie :D

Sorry, what is the question?

The question is: How much time has really been put into PPC and actual honest evaluation of total cost based on his time developing PPC?

I don't buy his $100k-$200k estimate. It's bullshit. That is what I call "pump" in the scheme called "pump and dump".

"hey look at how much time I put into PPC. It must be worth lots so buy it"......is how I translate that.

This is nothing to do with "ppcoin transaction fees", and is probably best made asking op directly.  

But, i'll feed you a little. I feel that Sunny King has contributed a lot of time to this project, and is valuable to the community.

I dont really care if you buy, or not into whatever estimate.  I see a project being developed, with unique traits over all the other alt chains.  Im here to invest time into things I feel are a worthy cause and competitor for the BTC clones. A friendly suggestion, maybe you should go and find something to invest your time into.

Anyway please, lets try and keep this on track and analytical. If you have other questions, why not make a thread, or if its a direct question to the dev just pm him.

Yup already did that...except the PM part. There isn't any reason to be private about this. Transparency is a good thing.

P.S.  Note the color attached to smoothie's "ignore" link.  This indicates that a profile is a frequently-ignored profile, usually for trolling reasons.

Yes "usually", but not always.

Most people ignore me because they can't take the harsh realities of the truth.

Jeff I figured you had more important things to do than worry about an insignificant troll like myself on some obscure "scam coin" subforum right? Or was I wrong? lol

 :D

Jeff probably skims this sub forum for the same reasons I do-- entertainment, to keep my mind open to new ideas, and the chance that there will actually be some good ideas.

I'm glad I can  help keep the entertainment alive.  :D

Yep.  Open competition means there is always a chance somebody will create a better-than-bitcoin alternative currency.  It is refreshing to see people trying new ideas beyond "change block #0 and call it jgarzik-coin"

I see. So the default behavior for clients will be that higher transaction fees increase priority. However, in contrast to bitcoin, the transaction fees do not get redistributed to the validation nodes, but get destroyed instead.

Honestly, I think the attempt to remove monetary incentives from the transaction schedule, if the blockchain gets crowded, is futile. I predict the following will happen: Validation nodes will "sell" their transaction volume in form of specially crafted transaction types to users. I would have to think for a while how that would be technically accomplished, but I am pretty certain people will find a way.

However, the above scenario also shows a way how the "situation" can be fixed without requiring a hard fork.

ADDENDUM: After thinking about it for a moment, I think a simple solution would be if validation nodes publish a BTC address, which they consider for transaction fee payments. Then they can advertise that they only include transactions which include an output to that particular address. This works perfectly, since NOT including transaction doesn't impose a penalty. Thus the pressure is on the user.

Spinning that scenario a little bit longer suggests an interesting constellation: Validation nodes with large mining power can advertise their transaction volume at high prices, because they can guarantee fast transaction processing, while validation nodes with small mining power have to settle for lower prices. This is a totally screwed up situation.
How does that differ from bitcoin? It doesn't, bitcoin is susceptible to the same dilemma. However, in bitcoin the bargaining power is with the user creating the transaction, while in ppcoin the bargaining power is with the validation node, for two reasons: 1) POW blocks and POS blocks always provide a reward, irrespective of the number of transactions. 2) POS blocks don't impose a cost for the validation node.

That is the beauty of the free market. As some may be looking for "innovation" to be a requirement for a medium of exchange. I disagree. People didn't make up their own precious metal or have to be innovative in creating a precious metal in order for people to agree it is "money" or a "medium of exchange". They just used silver or gold in a different coin imprint or shape etc.

Bitcoin is awesome and yes having other ideas be experimented upon is the purpose of this subforum, but when people come here and blatantly spout lies about their new "alt-chain" it tends to leave a sour taste in my mouth.

Good example is Solidcoin. Nuff said.

Based on my arguments provided in
https://bitcointalk.org/index.php?topic=114664.msg1237882#msg1237882

I think the following incentive system for transaction fees would fix the dilemma. However, it's NOT a fee, it's a reward for the validation node!
transaction reward: 1% * (1/365) * coindays destroyed

The 1% * (1/365) * coindays destroyed is chosen to resemble the POS block reward.
This scheme results in ALL money to generate a 1% inflation per year, instead of only the fraction which is used for POS.

The reward scheme should divert the validation nodes from establishing an alternate monetary incentive system for transactions.

Let me know what you guys think about this.

This has the same problem of directly giving transaction fees to minters. Minters would have strong incentive to not acknowledge other minters blocks and force reorganization, just to grab all transaction fee/reward for himself.

What do you think about the problem of validation nodes having a huge bargaining power, as outlined in https://bitcointalk.org/index.php?topic=114664.msg1237882#msg1237882

Unlike in proof-of-work, frequent reorganization is not personally costly for the minter. Mixed proof-of-work/proof-of-stake blocks is one possible resolution.

Can you overcome this by making txn fee revenue (100/n)% of txn fees in the minters block and (100/n)% of txn fees in the previous (n-1) blocks? I think If you do this, there would now be an incentive to include txns, but stealing txns from prior blocks would no longer be advantageous.

Comments?

The color attached to the ignore link measures hostility towards libertarians. I'm trying for a red color to better express my true feelings, but it seems to max out at orange.  >:(

It may or may not happen, at least I don't think it would happen before blocks are getting crowded (multiple thousands of transactions per block). It depends on whether a significant portion of minters are content with earning 1%. If they are, then I don't think any particular group of minters would be too successful at collecting additional revenues while under quite a bit public scrutiny.

On the other hand, it's also debatable whether minter collecting inclusion fees are okay. It's not all that different from miners setting minimum transaction fee in bitcoin (hasn't happened yet), other than more bloating of block chain.

Yes spreading transaction fee to n-blocks would definitely lessen the negative incentive quite a bit. That would be one possible solution if this proves to be a problem in the future.

I agree that the problem doesn't exist yet, thus no need for rash decisions.

I think the bargaining power "already happened". Validation nodes have no incentive to include any transactions right now. If there is a little incentive that would already help a lot. Then you also get competition effects between validation nodes for free, which is important for the balance of power.

The problem is, validation nodes DO NOT get punished in any way when they don't include any transactions. Thus they can sell their transaction volume at ridiculous terms. That's what I mean with bargaining power.

In general, I like the approach of ppcoin to avoid direct monetary incentives for inclusion of transactions. However, as it is right now I see a huge quality-of-service problem coming in the future. Better to fix it sooner than later.

Why don't we start collecting ideas for a smarter incentive system so we have a solid proposal in a few months when we need it?

Sure we can keep this discussion going and see if other good ideas come up. Although I'd like to point out some important considerations:

• Destruction of transaction fee serves an important function of counterbalancing inflation.
• Cost of transaction processing may be too low to be any incentive for rational minters to exclude transactions (network consists of altruistic, rational, malicious participants).

https://en.wikipedia.org/wiki/Tragedy_of_the_commons

The tragedy of the commons only refers to the unreliability of altruistic component of the network. What I am saying is that even rational nodes would not try to sabotage the protocol because the gain is too little. Not many people are going to modify code, rebuild or download risky builds just to save a few pennies.

If you don't believe me, then please explain to me why after 4 years bitcoin network still processes fee-free transactions happily? All my fee-free bitcoin transactions are processed without a hiccup.

Uh the word rational is in the first sentence.


It's not sabotage when it is a perfectly legitimate use of the protocol. Wishful thinking (https://en.wikipedia.org/wiki/Wishful_thinking). As I've said, you can't predict the future and you don't know how big or how little the gain may be. It's very unlikely that all nodes will do this, but even when some do it causes delayed transactions and puts added pressure on altruistic nodes.


Do I really need to explain this to you? Because this question is just begging to get a witty retort that may or may not involve senior software developers and how much they make and if money has a direct correlation with the Dunning-Kruger effect (https://en.wikipedia.org/wiki/Dunning–Kruger_effect).

lol how cute and witty. I don't know who is doing the wishful thinking or having dunning-kruger effect problem. Fine if you are so superior my suggestion is that why don't you go take care of your own matters and release working prototype and stop wasting both your time and my time?

Thank you very much

I am not trying to waste your time, I am imploring you take these types of things seriously rather than dismissing them and waiting until something becomes a problem. Having the primary developer being only worried about the here and now with no regard to the future reeks of a pump and dump, and oh yeah, loses my respect*. I agree with you to some extent that the bitcoin devs are too strict on the hardfork because NOW is the time to do such things, not when there are embedded applications that will have to be replaced.

* - I'm sure you don't care, but you are pretty easy to bait

Here is a thought experiment.

1) Each block has a time stamp T. All txns also have time stamps t. Blocks cannot contain txns from the future, e.g. all txns up to block T satisfy t<T
2) For the purpose of calculating fees, each block contains all txns over the past 2 hours.
3) Minters get a constant share of each txn fee, i.e. each minter gets to keep 1/12 of all the txn fees from txns for which T-t< 2 hours. (of course there is a random element to aggregate fee distribution now, but that is not a problem)

Under this design, only the txn time stamp and the block time stamp matter for fee revenue. You cannot affect your txn fee revenue through reorganization in any way. There is still a strong incentive to include newly broadcast txns. Including these txns allows you to capture a share of their fee revenue, which would otherwise go to future minters.  

Comments?

[Edit: Another thing about this is that it weakly incentivizes txn broadcasting. Keeping knowledge of a txn private cannot benefit you at all because you cannot affect the time stamp of the txn. Assuming that blocks are all full of txns or sometimes full of txns, you actually lose expected fee revenue if you fail to broadcast high fee txns that you are aware of.]

Liking this constructive discussion, good :)

This is a good variation of spreading transaction fees. Some points below:

• Fee distributing transactions need to be both within 2 hours and 12 blocks
• Maybe still allow portions of fees to be destroyed, for example destroy portion of protocol-required fees, another example is to destroy the overpaid fees (further discourage grabbing of high fee transactions)
• The timestamp rule t<T is already in ppcoin protocol

Just to be sure... you're not suggesting that the new block actually contains the data. Just that previous blocks are evaluated when the fee is calculated, correct?

Can you explain what you mean by "fee aggregation"?

The "constant share" is a direct monetary incentive again. Thus solving the QOS for the user (the user has the ability to raise the priority of the transaction).
I am a bit unclear on how the transaction fee is split. Are you proposing that 100% of the TXN fee gets redistributed across 12 blocks? Then we're missing the deflationary force again, as pointed out by Sunny. A simple solution would be to take the MIN_TX_FEE off the amount for redistribution. MIN_TX_FEE gets destroyed, the rest gets redistributed to the 12 owners of the block series.

I think this is the most constructive proposal so far. Good work!

That rule would add another non-predicatable deflationary force though. Because suddenly an UNKNOWN portion of the TX fee MAY be destroyed... people are already complaining about the non-predicatablity of the money supply....

If you add in the within 12 block rule, then you reintroduce incentives for reorganization. I can now capture more fees if I displace the last mined block (in some cases).

If you make it a 40 or 100 block rule, then only the time limit will be binding and it should be fine. (i.e. the block limit would only matter if the time stamps break down.)

With a 12 block rule, the block limit is frequently binding and therefore reorganizations are often beneficial to the minter.

Yes, no point in duplicating the data.


The number of blocks per 2 hours is random. Therefore, the number of blocks that are eligible for the txn fee/12 is random. On average, however there are 12 blocks every 2 hours, so it would approximately balance out over a long time span.

Any fixed% is fine. If you want a deflationary force, then make the % less than 100. I don't think the amount which can be collected as a fee should be capped.


I don't mean 12 blocks. If you base it on the number of blocks you will have incentives for reorganization. I mean a 2-hour validity window determined purely by the timestamp on the txns and the timestamp on the block. Any block that makes it into the window gets txn fee/12. Sometimes you pay out more in fees then the txn fees included in the blocks (i.e. fees have to be minted). Sometimes you pay out less in fees than the txn fees included in blocks (i.e. fees have to be destroyed). It depends on how many blocks are generated in that two hours.

There might be some subtle gaming of the block timestamp involved which would prevent it from balancing out over the long-run. Not sure about this. In any case, you can leave a safety margin by destroying a fraction of the txn fees.

If fee collected is allowed to exceed fee paid I would reinterpret the proposal to be 'minting based on transaction fee'. So the expected minting is a percentage of total transaction fee paid. A consideration of a max minting limit might be necessary.

If the base transaction fee (1 cent per kilobyte) is always destroyed, I don't know if this satisfies most QoS concerns. Presumably if a QoS issue develops, users can raise their paytxfee to get confirmation faster.

Another consideration is paying part of transaction fees to minters might encourage minters to delay the announcement of proof-of-stake blocks. Although this might be an easy fix by enforcing that block timestamp must equal coinstake timestamp.

I wouldn't worry about this. For example, you could just destroy 75% of txn fees. In this case you would need to see more than 48 blocks in two hours to have any possibility of running up against the minting limit.  Probability of this occurring is 3*10^-15. (e.g. it would happen once every 76 million millenia on average). Say we destroy 50% of txn fees, then you need to see more than 24 blocks to hit the limit. It would happen once every two months. You would need to allow an exception to the 2 billion limit for transitory minting of txn fees. These are later destroyed, resolving the problem. The total volume of currency issued could temporarily jump above 2 billion by a tiny amount.

[Note: I am assuming that the blocks have a poisson arrival rate, but if the block timestamp can be chosen arbitrarily by the minter (within two hours advance notice), then this will not hold.]


Just destroy a fraction of the base txn fee, not the whole thing.


I think this could be an issue. If there is an easy fix that is good.

Are the transaction fees calculated from the size of the transaction in bytes, like for BTC and LTC?

Another potential problem with PPC is that PoS generate a huge amount of tiny fractions of coins over time that add up to large amounts in blockchain fees when they are actually spent.  Given a small amount of PPC, I imagine it is actually be a disincentive to hoard and get stake blocks for years on end because you'd just get swamped in transaction fees for the many kilobytes of inputs that you'd have to spend from.

What I really worry about in PPC's proof of stake system is the general disincentive not to save coins -- I think the maximum return for hoarding stake coins is 1% for year, while the currency inflates wildly according to the quantity of miners.  Without a strong incentive to hoard coins and avoid spending them, the PoS system falls apart.

Yes transaction fee is charged on per kilobyte basis like in bitcoin. Fee rate is 1 cent per KB. And to simplify things and avoid user confusion, no fee-free transaction.

Over long term the level of proof-of-stake protection should be alright, it is not expected that a majority of coins to be constantly participating in the proof-of-stake generation such that it interferes with the coin's medium of exchange functions. Think about long term with bitcoin, the cost of proof-of-work protection is shrinking as a percentage of the total money supply as the block subsidy reduces. So to reach a comparable level of security, even just a few percent of the money supply are participating in proof-of-stake generation that could have been enough to deter double spending.

I am trying to understand, but it's quite complex... so, the advantage over bitcoin is that proof of stake is less expensive; and this should reflect in lower fees.
But will they still be lower if a significant amount must be destroyed?

And could you explain why it would be so bad to give fees to miners?

This is already explained in the design paper. Transaction fees would be an incentive for minters to try to 'grab' from each other. If this happens network would lose a significant portion of proof-of-stake protection.