Really?  Just for:

• 23 counts of Transmission of Pornography by Electronic Device or Equipment.
  
• 23 counts of Possession of Child Pornography.

Did he scam you or something?

Edit: Transmission charges were dropped.

Honestly, I'm not sure either.  I'm applying the same elasticity of demand thinking you described above but to a single miner.

Imagine a world where basically all fees are <= 1 satoshi.  Suppose Alice is a miner with 5% of the network's total hashrate.  Alice could advertise that she will no longer be processing all transactions but only those that pay at least 10 satoshis.  Each bitcoin user now has the option of paying 9 extra satoshi to reduce the expected first transaction waiting time by about 30 seconds.  Supposing this extra utility is worth the 9 satoshi in enough cases, Alice would increase her revenue.

I also wonder about store of value.  The commodities you listed can all store value but I don't think this can be done with block space.  Supposing commodity super cycles are driven by speculation, what is the equivalent mechanic in Bitcoin?

I'd very much prefer to determine an appropriate block size limit algorithmically.  Unfortunately, I cannot think of a way of doing this.  There do exist several dynamic limit proposals but none of them do the work of tracking technological progress.


Block subsidies are not necessary to make mining viable.  Even with no subsidy and no limits, transactions would be processed.  It is true that this situation could well lead to extremely low difficulty but this is a different matter.  It is far from clear that this calamity can only be solved by a blocksize limit or that such an approach would even work.

The real problem to an overestimation is that full nodes could well become progressively more expensive to maintain.  This would reduce the number of nodes (including mining nodes) and drive us towards centralisation.  This would require intervention and is a major strike against the proposal.  Fortunately, the growth rate of the BIP101 is rather conservative (not compared to other proposals, but compared with projections of technological growth).


If the blocksize limit is far below what humanity is capable of accommodating with a highly decentralised network then yes, we'd be in a situation similar to the one we have today (hopefully without the node crashing concerns).  This problem applies to all of the proposals.


It's not the conservative solution, it's a solution which follows a conservative estimate of future technological growth.

You've lost me here.  You explained that prices were artificially high due to cartels.  However, you then say that a cycle is complete when "producers over invest".  How does over investment necessarily lead back to cartels?


Another difference to bear in mind: block space is not treated as a fungible commodity the way oil, iron, gold, and copper are.  Many people are willing to pay more for a faster first confirmation.

Might I suggest:
BIP101 - Continuously raise the limit from 8MB on January 11, 2016 so that the limit is doubled every two years (Bitcoin XT).

"double the limit every two years" makes it sound like the limit will stay at 8MB for two years and then jump suddenly to 16MB.

Earlier in draft (before becoming a BIP) it was 20 MB + 50%/year (125% per two years).

I would happily support a similar proposal with different parameters if the parameters were well-justified and it grew to have more support than BIP101.

One idea: Is it possible to set up (or does there exist) a platform allowing people to bet on the state of technology 20 years from now?  If there were a lot of money in the pot predicting slower growth than BIP101 needs then you could make a strong case for a more conservative proposal.

Miners are driven to maximise the purchasing power of their income, not simply their nominal bitcoin income.  If most miners felt that a larger block size would yield greater real value then I don't see why they wouldn't vote for it.

Or, as jonny1000 noted:

Ok, my misunderstanding.

(emphasis mine)

Nice clear example.  I agree.  A fee market may cause profit-seeking miners to increase network security.

That said, I don't find network security to be a particularly compelling reason for having a fee market.  There seems to be practically no connection between a miner's incentives regarding voting and true demand for network security.  I could easily imagine this method yielding far too little security or far too much.  I believe there are better solutions to the large-block low-fee tragedy of the commons problem.

If each of the variables:

• The optimal level of network security;
• The point of unit elasticity (where S * P is maximal);
• The artificial limit derived by BIP100, driven by all of a miner's incentives;
• The limit of what a well-decentralised network can supply,

happen to have a particular relationship with one another then I'm sure BIP100 will behave superbly (even in the long term and without limits).  It wouldn't surprise me to learn that there is some subtle robustness (mechanisms naturally drawing these quantities into a healthy relationship) given the technical brilliance of the people that helped created the proposal but it's also possible that BIP100 is built upon a certain amount of wishful thinking.  I've warmed to it slightly thanks to your efforts but I remain cautious.

Ok, let's see if I understand.

In this scenario, without the 2GB limit, blocks would not generally fill up.  This is not necessarily because no-one can think of any more uses for the space, but because the costs of relaying, processing, and storing any further transactions outweigh the benefits of using the space.  (I'll note that if this is true, we're probably operating under a different idea of "technical limitation").

With the 2GB limit in place, the total transaction volume is reduced but the total value of all transactions actually increases (following the S * P logic from earlier).

If this persisted for decades (as you suggest above 2 decades to 2035 + still more years of the same) I agree that it begins to look pretty safe to remove the 8GB limit.  In this case, I will have been practically proven wrong about my concerns.

Question: Why not remove both the 2GB limit and the 8GB limit?  With both limits gone, mankind will enjoy more transactions and lower fees.  Why should we prefer fewer transactions, higher fees, and a more complex protocol?

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.

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.

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?

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.

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).

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.

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.

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.

Interesting.  So it seems that you're particularly wary of the proposals which speculate long-term exponential growth of resources like bandwidth.  I certainly understand that, it's a huge drawback to BIP 101 no question.

For myself, as much as I am uncertain about future bandwidth growth, I am fairly certain that the bitcoiners of 2025 (if there are any) will be less interested in decentralisation than we are today and far more amenable to the formation of a special organisation to manage the protocol.

Just out of curiosity, how would you feel about BIP100 + Sipa's proposal?

I get that.  I meant is it possible to create a trustless measure, something that Bitcoin itself could refer to for example in calculating an appropriate block size limit.

I vaguely recall Gavin was toying with the idea of trying to measure technological development trustlessly by, for example, having full nodes report how long it takes them to verify a block.  Unfortunately, this system was open to abuse.

I didn't keep up with this line of inquiry and learned that eventually Gavin turned to simply estimating future technology trends (e.g. BIP 101).  I can't prove to myself that a dynamic approach is impossible so I decided to think out loud here.  I guess what I'm looking for is for someone to show me how to abuse the idea above; this would definitely help me hone in on the problem.  If no-one breaks it then I'll expand the idea and flesh out a draft proposal to catch more eyeballs.

I said I could see no clear reason to reject BIP 100.  I've never claimed to support it.  I realised my earlier comment might be misleading (I meant it literally) so I thought I'd clarify my position.  I found jonny1000's comments interesting because it highlighted that perhaps BIP 100 and BIP 101 were really doing different things.


Is there some mechanism in BIP 100 that prevents us from reaching a block size limit of 32 MiB within a few years?  I don't see why miners voting to maximise their profits would keep growth slow, especially not if there is a large uptick in adoption.


Right now I support BIP 101 (and have done since it was drafted).  My preferences at the moment (not that they matter much):
BIP 101 > sipa's proposal > Straight jump to 8MB > BIP 100 + BIP 101 > Straight jump to 32 MiB > BIP 100 > Do nothing.

I consider BIP 100 better than doing nothing (don't see how it hurts Bitcoin).  I do not support it because I think there are many better alternatives.