I'm trying to get the economics of this down for a written piece.
Ive got a few problems though:

What is the Incentive of being a good node?
What is the dis-incentive of being a bad node?


For example at a marketplace, people build up a reputation, and wouldn't want to damage it by selling bad goods.
An untrusted seller at a market place will be met with low sales. Thus there exists an incentive to selling good goods.


With bitcoin, say Im deciding whether to be a good node or a bad node. Is it not true that im impartial? Wont I get paid either way, as long as I solve the block?

Now I know that in most systems (and definitely bitcoin) that there are much more good nodes then bad nodes. But what is the rationality behind it from an individual level?

It forces you to read the newbie threads.

If you just spam and get flagged your deleted. The newbie section creates a concentrated space (pandoras box) to detect undesirables.

A paper bitcoin network is in my mind unwanted when compared with the bitcoin network.

The bitcoin network is a public ledger system. (no counter-party risk)
A paper bitcoin network would entail a private ledger system. (identical to online wallets. carry counter party risk)


The 2 could co-incide, however:
Paper bitcoins would carry a risk premium (counter-party risk), and an ease of use premium for the customer.

The ease of use premium for paper fiduciary however over the last 20 years is radically approaching zero.
I think paper currency is quickly becoming obsolete, as the benefits of digital currencies grow.

In asia they are trialing phone payments. i.e. you swipe your phone to pay instead of a card. (that could easily be leveraged by the bitcoin network.)

What would be cool is if you could create a bitcoin card.
that contained your wallet, so you could swipe it at the checkout.

In Australia though that would entail merging both the private EFTPOS network and internet into the card readers which would never happen in a million years (all the security risks.)
Or banks letting you transact on the bitcoin network via their eftpos network. (which is currently farfetched.)

So probably swiping your phone would be the next step for the bitcoin network.

Also Im having trouble with the same point.


They say that transaction fees will grow to run the system.
And that the fee structure is flexible.

I.e. higher fees, faster transaction time.

But I dont see how this is possible.

Once someone finds a block the hardwork is done, the oppurtunity cost of accepting any fee is 0.

Thus it makes sense that a rational miner with a block, will accept all transaction fees regardless of size.

Thus the transaction time for a 1btc fee and 1000 btc fee would be equal?

is there something im missing? The only way this would change is if miners could somehow pick which transactions they want to go after. But that seems incompatible with the current network?

Hey, Im from Australia (sydney)

I'm here to learn, I want to understand how the BC network operates.
And see if I can replicate the network to transact in multiple mediums.

I.e. extend the bitcoin network to USD, Swiss Francs, Gld shares, Microsoft Stocks etc.

I want to be out of here!


What I want to be able to do is to try and seperate the bitcoin network from transacting in only bitcoins.

And instead try and create a system where people trade rights to assets.

Aka. turn the bitcoin network into an open-source open-network ETF exchange.


Also I want to know how the transactions work, I read the wiki page.

But it seems like there doesn't exist a proper time/fee mechanism as stated in the wiki.

The wiki depicts a picture where the block node chooses whether to accept the transaction after it has the block.

It thus seems that a rational block would accept all transaction fees greater than 0.

Thus assuming rationality, a 1000bitcoin transaction with a 1bitcent fee would get the same execution time as a 1000bitcoin transaction with a 1000bitcoin fee.