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Title: Would miners ever want to generate "fake" transaction volume? Post by: JorgeStolfi on April 02, 2014, 03:41:22 AM (Apologies if this is a stupid question)
Could it be advantageous, in some circumstances, for the miners to collectively generate "bogus" transaction volume? By that I mean a large number of perfectly valid transactions that merely shuffle coins between two or more addresses owned by the same miner. Presumably there is no advantage for a single miner to do this, but what about an hypothetical mining cartel that accounted for a sizable percentage of all the mining activity? Title: Re: Would miners ever want to generate "fake" transaction volume? Post by: romang on April 02, 2014, 03:48:19 AM (Apologies if this is a stupid question) Could it be advantageous, in some circumstances, for the miners to collectively generate "bogus" transaction volume? By that I mean a large number of perfectly valid transactions that merely shuffle coins between two or more addresses owned by the same miner. Presumably there is no advantage for a single miner to do this, but what about an hypothetical mining cartel that accounted for a sizable percentage of all the mining activity? Maybe might make a news story about transaction volume going up and the price might rise a little but that's about it. Title: Re: Would miners ever want to generate "fake" transaction volume? Post by: JorgeStolfi on April 02, 2014, 04:43:15 AM Maybe might make a news story about transaction volume going up and the price might rise a little but that's about it. Normally I suppose that would be the case. But imagine the extreme hypothetical case where transactions drop to zero (say, because all bitcoin owners decide to hold their coins, or all transactions happen in internal ledgers of "bitcoin banks" without actual blockchain transactions). Would the miners "starve"? Or would they keep mining empty blocks?Title: Re: Would miners ever want to generate "fake" transaction volume? Post by: DannyHamilton on April 02, 2014, 04:56:12 AM Maybe might make a news story about transaction volume going up and the price might rise a little but that's about it. Normally I suppose that would be the case. But imagine the extreme hypothetical case where transactions drop to zero (say, because all bitcoin owners decide to hold their coins, or all transactions happen in internal ledgers of "bitcoin banks" without actual blockchain transactions). Would the miners "starve"? Or would they keep mining empty blocks?As long as the block subsidy still exists, they will simply mine empty blocks and receive the block subsidy as a reward. Eventually, bitcoin will need a continuous flow of fee paying transactions to provide the necessary incentive for miners to participate. The block subsidy will fall to extremely small amounts, eventually falling to 0 BTC. If bitcoin doesn't ever reach a high enough level of acceptance and use to provide such a continuous flow of transactions, then miners will begin to shut off their equipment and the security of the network will falter. It would not be productive for a miner to create transactions. At best, they'd be paying themselves with their own bitcoins. That certainly doesn't provide an incentive as they could increase their profits if they just keep the bitcoins and avoid spending resources on mining. At worst, they would create transactions that would be confirmed by some other miner, essentially providing an incentive to other miners to try to destroy their profitability. Title: Re: Would miners ever want to generate "fake" transaction volume? Post by: JorgeStolfi on April 02, 2014, 04:59:09 AM As long as the block subsidy still exists, they will simply mine empty blocks and receive the block subsidy as a reward. Eventually, bitcoin will need a continuous flow of fee paying transactions to provide the necessary incentive for miners to participate. [ ... ] Thanks! Title: Re: Would miners ever want to generate "fake" transaction volume? Post by: mintodev on April 02, 2014, 12:35:00 PM Maybe might make a news story about transaction volume going up and the price might rise a little but that's about it. Normally I suppose that would be the case. But imagine the extreme hypothetical case where transactions drop to zero (say, because all bitcoin owners decide to hold their coins, or all transactions happen in internal ledgers of "bitcoin banks" without actual blockchain transactions). Would the miners "starve"? Or would they keep mining empty blocks?As long as the block subsidy still exists, they will simply mine empty blocks and receive the block subsidy as a reward. Eventually, bitcoin will need a continuous flow of fee paying transactions to provide the necessary incentive for miners to participate. The block subsidy will fall to extremely small amounts, eventually falling to 0 BTC. If bitcoin doesn't ever reach a high enough level of acceptance and use to provide such a continuous flow of transactions, then miners will begin to shut off their equipment and the security of the network will falter. It would not be productive for a miner to create transactions. At best, they'd be paying themselves with their own bitcoins. That certainly doesn't provide an incentive as they could increase their profits if they just keep the bitcoins and avoid spending resources on mining. At worst, they would create transactions that would be confirmed by some other miner, essentially providing an incentive to other miners to try to destroy their profitability. That's true. Title: Re: Would miners ever want to generate "fake" transaction volume? Post by: kjj on April 02, 2014, 07:34:08 PM Under the current rules, no.
There have been, however, many silly suggestions in this forum that would (intentionally or otherwise) give such an incentive. Title: Re: Would miners ever want to generate "fake" transaction volume? Post by: smolen on April 03, 2014, 02:11:02 AM Yes, to establish indirect communication via blockchain between independent nodes and to artificially lower extranonce values.
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