I thought about that but that would have eliminated too many buyers here. Technology freaks != Personality (take nutildah for example)



It's a rough road ahead. I have some big silly clown shoes to fill. LOL

Did you read my "blocksize economics" blog post?

I don't understand why you think MAX_BLOCK_SIZE necessarily has anything to do with "supporting mining" (aka securing the network).

What stops this from happening:

Big miners accept off-blockchain payments from big merchants and exchanges that want their transactions confirmed. They are included in very small blocks with zero fees.  The blocksize stays at 1MB forever.

Lets look at incentives:

Big miners: have cozy agreements with Big Merchants. Those agreements keep the little guys out.

Big Merchants: same thing. The need to get an agreement with a miner to get your transactions accepted is a barrier to entry for the Little Guys.

What an asshole.

That's bullshit in my opinion. If the government wants to get you they can find an excuse, someway, somehow. I'm sure all bitcoins are in some way are linked to illegal activities. Even almost every bill in the USA has cocaine on it: http://www.cnn.com/2009/HEALTH/08/14/cocaine.traces.money/

The police learned about them by wandering around bitcoin exchange website known as LocalBitcoins. They pretended to be credit card thieves trying to launder their illegal profits.

It's not gold backed. All BitAssets are backed by BTSX.

At the endgame it will allow to speculate and hedge without counterparty risk. People will also be able to earn interests on their savings while having their purchasing power store in any asset of the economy they wish, without counterparty risk. But yeah, it's just a fad.

There may be a way of using the coinbase fee also in this calculation, but treated differently.  The coinbase fee primarily serves the emission and distribution functions, but also stimulates adoption in the early years.  It might be used as a way of amplifying the metric in the early years (when lack of adoption is a significant existential risk, and percentage growth is presumably higher) and then let this effect subside in later years by some form of multiplying by (Coinbase)^-1/2

Currently the cost per transaction, with the coinbase included, is often higher than the transacted amount.  Such transactions would not occur without the coinbase, so a way to accomodate for what this proposal would mean (because we would be unlikely to have any meaninful MAX_BLOCK_SIZE increases so long as coinbase transactions are the funding source for the network.

If I miner did somehow push the fees and blocksize up, that miner could then publish large blocks in an attempt to spam / DoS the network.  That's the only real threat, and it could be very costly and slow for the miner to accomplish.  Unlike the difficulty adjustment, which is bounded at 0.25X to 4X, the max block size adjustment could have a much tighter bound, like 10%, so that it would take months to double the max block size.

I think this is simple and straightforward enough that miners, developers, and bitcoin users can read it, understand it, and be OK with it.  I also think that it's safe long-term, and doesn't require human intervention once set up, regardless of how computer technology evolves (or fails to) over the next few decades.

No, it's never really been for sale. Read above.

I'd welcome comments / criticism of why having such a feedback mechanism is a good or bad idea.

What about the following modification:

a1) fold a modified p2ppool protocol into the mainline protocol
a2) require that transactions mined into the mainline blockchain have to be seen in the majority of p2ppool blocks
a3) p2ppool then has an additional function of proof-of-propagation: at least 50% of miners have seen the tx
a4) we can then individually adjust the fees and incentives individually for:
a4.1) permanent storage of transactions (in the mainline blockchain)
a4.2) propagation of transactions (in the p2ppool blockchain, which is ephemeral)

Right now the problem is that miners receive all fees due, both for permanent storage and for network propagation.

Another idea in the similar vein:

b1) make mining a moral equivalent of a second-price auction: the mining fees of block X accrue to the miner of block X+1
b2) possibly even replace 1 above with a higher, constant natural number N.
Late edit:
b3) reduce the coinbase maturity requirement by N
End of edit.

Both proposals above aim to incentivize and enforce propagation of the transactions on the network and discourage self-mining of non-public transactions and self-dealing on the mining fee market.

The answer cannot be in the blockchain, because the problem being addressed (resource usage rising too quickly so only people willing to spend tens of thousands of dollars can participate as fully validating nodes) is outside the blockchain.

You will go down the same path as the proof-of-stake folks, coming up with ever more complicated on-blockchain solutions to a problem that fundamentally involves something that is happening outside the blockchain. In this case, real-world CPU and bandwidth growth. In the POS case, proof that some kind of real-world effort was performed.

Yes, he did. I wouldn't trust him.


Read: https://bitcointalk.org/index.php?topic=219714.msg2427812#msg2427812

My 2uBTC on this issue:
Instead of guessing the costs of the network via extrapolation, code in a constant-cost negative feedback mechanism.  For example, similar to difficulty adjustments, if mean non-coinbase block reward > 1 BTC, increase max size.  If mean block reward < 1 BTC, decrease max size (floor of 1MB).

Here's why I think this is a long term solution.  With Bitcoin, "costs" and "value" have a very interesting relationship; currently with mining, the costs to run the network are determined by the exchange value of a bitcoin.  Long term, the block size constrains both the cost and value of the network.  By "long term", I mean 100 years from now.  Long term, there's no more coinbase reward.  So miners compete for transaction fees.  Limited block size causes transactors to compete for space in the block, driving up the fees.  An unlimited block size would, without other costs, tend to drive fees to near-zero, and then there's not enough incentive for miners to bother, and the security of the system is compromised.  That's the death spiral idea anyway, which may not actually happen, but it's a legitimate risk, and should be avoided.  The value and utility of bitcoin today has a lot to do with the probability that it will have value in 100 years.

Max block sizes doubling every two years makes them pretty much unlimited.  Capping after 20 years is also a big guess. That also extrapolates Moore's law for potentially longer than the law keeps going.  Gigabit ethernet is what, 15 years old?  And that's what every PC has now, I've never seen 10G over copper ethernet.  Reliance on everything else becoming awesome is a very fragile strategy.

An issue I have with exponentially increasing block size, or static block size, is there's no feedback, and can't respond to changes in the system.  The block size in many ways determines the value of the network. All else being equal, a network that can handle more transactions per day is more useful and more valuable.

I think that similar to the current system of mining costs determined by bitcoin value, block propagation, verification and storage should be determined by how much people are willing to pay.  If transaction fees are high, block space is scarce, and will expand.  If transaction fees are low, block space is too cheap, and the max block size will expand.

This fixes a cost independent of the mining coinbase reward, allowing for sustainable, predictable mining revenue.  The issue is we would have to come up with a number.  What should it cost to run the bitcoin network?  1% of M0 per year?  That would be 210,000 coins per year in transaction fees to miners.  That would be about 3BTC per block.

0.5% M0 annually would be 1.5BTC per block, and so on.  This would be a ceiling cost; it could cost less, if people didn't make too many transactions, or most things happened off-blockchain, and the blocks tended back towards the 1MB floor.  It would effectively put a ceiling on the maintenance cost of the network, however; if blocks were receiving 6BTC in fees, the size would double at the next difficulty adjustment, which would tend to push total fees down.

If you wanted to get fancy you could have hysteresis and non-linearity and stuff like that but if it were up to me I'd keep it really simple and say that max block size is a linear function of the previous epoch block rewards.

This can be "gamed" in 2 ways.  It can be gamed to a limited extent by miners who want to push up the max block size.  They can pay a bunch of fees to themselves and push up that average.  I can't think of a clean way to get rid of that, but hopefully that's OK; isn't it the miners who want smaller blocks anyway?  If miners are competing for larger blocks, why would the non-mining users complain?  The only issue is one miner who wants larger blocks, and everyone else wants smaller ones.  Maybe use median instead of mean to chop out malicious miners or fat-finger giant transaction fees.

It can also be gamed the other way.  Your transaction fee is 0, but you have some off-channel account with my mining group which includes all your txs for a flat monthly rate.  This also seems unlikely; if it were more expensive that way, transactors would stop using the off-channel method and just go to the open market for transaction inclusion.  If it were cheaper, why would the miner forgo that revenue?

So if I ran this whole Bitcoin thing (which would defeat the point... , that's what I would do.  The question is how much it should cost.  1BTC per block sounds OK, it's nice round number.  That's 50K BTC per year for the miners.

I'd welcome comments / criticism of why having such a feedback mechanism is a good or bad idea.

True.  But they are the ones with experience dealing with ebola.  Might be we should learn from them.

It's not impossible that there might be some half truth to the Red Cross story.  Like, some focus of new infection and disease transmittal in the vicinity of the Red Cross facilities.  False attribution of cause to call it a conspiracy, yeah.

Just saying.

Kind of like saying...

"Stay away from those hospitals, mon.  I know for a fact lots of people go in alive and come out dead!"

I am not asking what should we legally define Bitcoin as (money, commodity, etc).

I am asking...what is Bitcoin? Legally speaking.

The definition usually has to do with saying it is a decentralized p2p currency.

Any definition of Bitcoin would need to include the Blockchain. But the Blockchain is constantly changing. The only way to define how it can change is through the code. But the code can change. It is open source and changeable. The only way to define how that can change is by defining who can change it and how.

If I were to put in my will "I leave my son one bitcoin" how can that legally be executed? If I advertise my house for 1000 bitcoins, if someone gives me 1000 bitcoins from when it forked 2 years ago, how would that legally be settled?

This can be easily gamed by stuffing transactions into the blockchain, shutting out smaller players prematurely.

No wonder Bitcoin isn't going anywhere! 

It can only be purchased in Arizona, and you have to have a medical card for it. Only about 35,000 or so people in Arizona have this card, or at least so I have heard.
Those with the card are limited to just a few ounces being purchased every two weeks. That means that with enough funding, they could very easily fulfill their promise.

I happen to think we can do better than Gavin's idea.  I like the idea of trying to come up with a solution that works with the blockchain and adapts over time instead of relying on Gavin, or NL or whomever.  The answer should be in the blockchain.

Let us assume that a country wants to make Bitcoin it's legal currency. Or it wants to pass a law specifically about Bitcoin.

How could it legally be defined?

Could they just say "Our country recognizes the following currencies to be legal forms of exchange <current currency>, bitcoin, ..."

With its decentralized nature and evolving blockchain, would there not be a requirement to have some sort of central authority which would continue to update the definition of Bitcoin? What if there is a branch off due to a code change, something is added and some miners accept it and some do not. What source of the code would be considered the "official" source? etc..


So far countries have been able to just group "cryptocurrencies or digital currencies" into one group which covers many things. But at some point it will probably be necessary to legally define Bitcoin. Not just as a country's currency but via contract disputes, payment agreements, property laws, etc...