Not Bitcoin XT

[kano]

if the price can adjust then demand will always equal supply.  The price for fees can change, more wallets need to implement this feature tho. That is all that is needed for there to be no queues.

The "fee market" idea is nonsense in so many levels that I don't know where to begin. I give up.

Bitcoin's story is "nerds and libertarians learning the basics of how the world works, the hard way".  The "fee market" will be another lesson: "how to manage a lemonade stand."

God damn I gotta love a lemonade stand worth over 3 billion dollars that's been in the market for almost 6 years ...

[Holliday]

Bitcoin's story is "nerds and libertarians learning the basics of how the world works, the hard way".  The "fee market" will be another lesson: "how to manage a lemonade stand."

Stolfi's story is: A guy who spends an inordinate amount of his free time following those nerds and libertarians around, pointing at them, and shouting, "You're doing it wrong!", while they just look at him and chuckle.

I give up.

Oh, I doubt it very much.

[RealBitcoin]

The "fee market" idea is nonsense in so many levels that I don't know where to begin. I give up.

Bitcoin's story is "nerds and libertarians learning the basics of how the world works, the hard way".  The "fee market" will be another lesson: "how to manage a lemonade stand."

Yeeeah.  Right on the head.  I've given up talking to these clowns, but you're right.

Small blocks and high fees are NOT a viable way forward. 

Of course, let's just give up gravity because we feel uncomfortable by not being able to fly. I`m really pissed at gravity, every time i jump out of the window from the 10th floor I cannot fly. Damn you gravity.

Free market is so nasty, let's just have corrupt control maniac oligarchy control the market because that will make it so much better...


You guys don't even realize how ridiculous you sound.

[modrobert]

RealBitcoin,

Fee != Free

[RealBitcoin]

RealBitcoin,

Fee != Free

WTF ? Free market doesn't mean that the item listed in it is free.

Free market means it's free from control and corruption, and the price is determined by voluntary trading, and not manipulated by central banks or etc.

I hope you guys are not so naive to confuse "free" as in free from corruption, with the other meaning of "free" which is with 0 cost.

[modrobert]

RealBitcoin,

Fee != Free

WTF ? Free market doesn't mean that the item listed in it is free.

Free market means it's free from control and corruption, and the price is determined by voluntary trading, and not manipulated by central banks or etc.

I hope you guys are not so naive to confuse "free" as in free from corruption, with the other meaning of "free" which is with 0 cost.

I just pointed out that JorgeStolfi mentioned "fee market", not "free market", it seems like you misread that part (original quote below).

The "fee market" idea is nonsense in so many levels that I don't know where to begin. I give up.

Bitcoin's story is "nerds and libertarians learning the basics of how the world works, the hard way".  The "fee market" will be another lesson: "how to manage a lemonade stand."

[JorgeStolfi]

Whenever the demand is greater than the capacity, some transactions will inevitably be delayed.  

Whenever the demand is greater than the capacity (supply), then the transaction price increases and those who will pay more get their TX executed, those who dont will have to wait a bit more.

Thus you can still send your TX in normal amount of time, you just have to pay more to get it cleared.

Yes, those transactions that pay higher fees will go first.

However, the capacity of the network is ~0.8 MB (~1500 trasactions) every 10 minutes.  If there is 1.6 MB of transactions (~3000 tx) in the queue, half of them will miss the next block, even if each of them is paying 1 BTC of fee.  

Fees can only decide which transactions will get served first; no matter how high they are, they cannot reduce the average waiting time -- not even by 1 second.

Moreover, it will not be "a little longer".  If clients (all over the world, independently of each otehr) are issuing 3000 transactions every 10 minutes, at most 1500 of them will be processed in the next block.  The other 1500 will go into the queue, adding to the backlog; and will be confirmed only after the traffic again drops below 1500 tx/block.  Even then, if the demand drops to 1300 tx/block, the the backlog will be cleared only at the rate of 1500 - 1300 = 200 tx/block.  

So, a surge in demand that lasts a couple of hours can take many hours to clear.  A large percentage of the transactions will be delayed until the backlog is clearing. Even if most transactions are paying high fees. The average time to first confirmation, which was ~10 minutes before the jam started, will then jump to several hours.

Even if tools like replace-by-fee (RBF) and child-pays-for-parent (CPFP) are available, they will not reduce the average waiting time by a single second.  If you use RBF to push your transaction to the front of the queue, so that is gets mined in the next block, some other transaction that was expecting to be in that block will be pushed to the second-next one, and another that was to be in the latter will be pushed to the third next block, and so on.  

If your transaction got into the backlog (and there is a significant chance that it will, no matter what fee your smart wallet chose), there will be thousands of other clients, just as impatient and wealthy as you, that will try to get their transactions ahead of yours, using those same smart wallets and fee-adjusting tools too.  So, after you sent your payment for your shuttle flight, or to reserve the last room in that hotel in Paris, you will have to keep checking the queues, increasing the fee of your transaction, maybe for hours -- only to wait until the backlog is clearing, anyway.   With a high probability, you will pay a lot more, only to wait much, much longer.

If the average demand is greater than the capacity, the backlog of unconfirmed transactions will keep growing forever and will never clear.  A fraction of the transactions will fall off the end of the queue, after sitting there for hours or days, and will never be confirmed. The average waiting time will then be infinite.

To summarize:

If the average demand is much less than the capacity, there is no fee market: all transactions that pay minimum fee will be processed in then next 10 minutes.

If the average demand is close to capacity, it will be greater than capacity during peak hours or days; then a growing backlog will form until the demand subsides, and the average waiting time will shoot up from 10 minutes to hours.

If the average demand is greater than the capacity, the backlog of unconfirmed transactions will keep growing forever and will never clear.  The average waiting time will be infinite and some transactions will never confirm.

Any bitcoin developer who wants to see bitcoin develop a "fee market" is either incompetent, or does not care about its users.

[JorgeStolfi]

God damn I gotta love a lemonade stand worth over 3 billion dollars that's been in the market for almost 6 years ...

... all this time with demand well below capacity and without a "fee market".  But now the lemonade stand is under a new management, who are is determined to change that...

[JorgeStolfi]

I give up.

Oh, I doubt it very much.

Rats.  It is so embarassing to be predictable. 

[kano]

God damn I gotta love a lemonade stand worth over 3 billion dollars that's been in the market for almost 6 years ...

... all this time with demand well below capacity and without a "fee market".  But now the lemonade stand is under a new management, who are is determined to change that...

So you pretend to be a professor and a financial expert

There is no 'new management'

Miners have always controlled what goes into each block.
Obviously a lot more than you realise
How this has been done has regularly been brought up for 'discussion' over the last few years ...

[JorgeStolfi]

Free market means it's free from control and corruption, and the price is determined by voluntary trading, and not manipulated by central banks or etc.

I hope you guys are not so naive to confuse "free" as in free from corruption, with the other meaning of "free" which is with 0 cost.

That is the problem: libertarians are all for free markets, but have a totally wrong idea of what "free market" means.  

It is NOT a market free from control or regulations.  

There are several requirement for a market to be a "free market". Among them: there must be several suppliers, and consumers must be free to choose among them, or do without the service.  Consumers know the price charged by each supplier in advance, and, if they pay that price, they will get what they paid for.  Most importantly, suppliers can increase their production if they find it is in their interest, and there cannot be unfair barriers preventing new suppliers to come into the market, if they have the required capital and expertise.

A market can have a ton of regulations and paperwork and licenses and bizarre licensing and auditing requirements; but it can still be a free markets, as long as those conditions apply to all suppliers, and there are entrepreneurs who could meet them -- if they saw a profit in doing so.

The theory then says that free markets are good fro mankind, because, in a free market, the suppliers will enter or leave, and adjust their prices, until the price will be just high enough to cover the cost of efficient production plus a return on investment as good as any other activity -- that is, maybe 10 percent per year.  

The "fee market" would fail to meet all of these conditions.  To begin with, there is only one supplier -- the bitcoin network -- and all bitcoin holders are forced to use it.  The supplier would not be allowed to increase the supply, because the block size would be limited by the developers' decision.  The clients will not know the fee that is required to get confirmed in N minutes before they send their transaction. (They will only know it after N minutes have passed, by inspecting the blocks that have been mined.) No matter how much they pay, they cannot be certain to receive the timely service that they thought they were paying for.

Indeed, what the "fee market" advocates want is the exact opposite of a fRee market: they want to create a monopoly market, where the single supplier limits the supply to a level that will guarantee him maximum return on investment.  Which means much reduceed benefits to society and a much higher price than what a free market would provide.

The only free market that could exist in cryptocurrency would be the market for e-payments among competing cryptocoins.  But that does not seem to be free in the US either...
 

[modrobert]

Power lies with those who control the market, dictate the rules, charge the fees, and establish the infrastructure.

What I like about Bitcoin is that the distributed system of consensus pretty much eliminates the possibility to gain unfair advantages, unlike most other markets. Even core changes to the system abide by blockchain rules of consensus client wise.

As soon as we move this control away from the system itself, back in the hands of people, no matter how good the intentions are it will be corrupted like any other market. To me, the core idea is to rely on math rather than people, in a fair automated system.

[kano]

Power lies with those who control the market, dictate the rules, charge the fees, and establish the infrastructure.

What I like about Bitcoin is that the distributed system of consensus pretty much eliminates the possibility to gain unfair advantages, unlike most other markets. Even core changes to the system abide by blockchain rules of consensus client wise.

As soon as we move this control away from the system itself, back in the hands of people, no matter how good the intentions are it will be corrupted like any other market. To me, the core idea is to rely on math rather than people, in a fair automated system.

Yep that's what will happen.
BIP100 is now 60% ... and hopefully 80% soon.
(XT BIP101 is still the same less than 1% it got from slush and only slush)
https://www.blocktrail.com/BTC/pools?resolution=24h

[canth]

Power lies with those who control the market, dictate the rules, charge the fees, and establish the infrastructure.

What I like about Bitcoin is that the distributed system of consensus pretty much eliminates the possibility to gain unfair advantages, unlike most other markets. Even core changes to the system abide by blockchain rules of consensus client wise.

As soon as we move this control away from the system itself, back in the hands of people, no matter how good the intentions are it will be corrupted like any other market. To me, the core idea is to rely on math rather than people, in a fair automated system.

Yep that's what will happen.
BIP100 is now 60% ... and hopefully 80% soon.
(XT BIP101 is still the same less than 1% it got from slush and only slush)

What does that matter? Bitcoin != only miners. The likelihood that either of these proposals get adopted is no higher than it was a month ago.

[mmortal03]

Stolfi's story is: A guy who spends an inordinate amount of his free time following those nerds and libertarians around, pointing at them, and shouting, "You're doing it wrong!", while they just look at him and chuckle.

He's not following them around; the "nerds and libertarians" are unavoidable in the Bitcoin space -- and many of them *are* doing it wrong.

[mmortal03]

Power lies with those who control the market, dictate the rules, charge the fees, and establish the infrastructure.

What I like about Bitcoin is that the distributed system of consensus pretty much eliminates the possibility to gain unfair advantages, unlike most other markets. Even core changes to the system abide by blockchain rules of consensus client wise.

As soon as we move this control away from the system itself, back in the hands of people, no matter how good the intentions are it will be corrupted like any other market. To me, the core idea is to rely on math rather than people, in a fair automated system.

Yep that's what will happen.
BIP100 is now 60% ... and hopefully 80% soon.
(XT BIP101 is still the same less than 1% it got from slush and only slush)
https://www.blocktrail.com/BTC/pools?resolution=24h

That's great and all, but my understanding is that that proposal isn't even fully fleshed out, and definitely not coded yet:

https://bitcoinmagazine.com/21747/closer-look-bip100-block-size-proposal-bitcoin-miners-rallying-behind/

How long will it take to gain consensus on even just how it's supposed to work? And, it only is supposed to go up to 32MB, so, using the small block proponents' own argument against you, will we not require yet another hard fork in the future once we approach 32MB?

[HostFat]

The "market of fee" can only develop if the demand (number of TXs) is higher than the probability that the miner get his block orphaned because too much bigger to spread correctly to the network.

There is already a natural limit on how much the block size can be big.

There is no need for virtual limits.

[mmortal03]

While relatively simple, some say that the voting procedure as described above has some flaws. (But note that it is not yet completely certain that this is how BIP 100 will actually function.) One issue that was raised on Reddit is the so-called “21% attack.” This refers to the ability of 21 percent of miners (possibly a single pool) to vote the block-size limit down as much as they want.
There is some logic behind Garzik’s rule, however. It is generally believed that bigger blocks are disadvantageous for smaller pools. Most Bitcoin developers worry, therefore, that left to their own devices, big pools could keep voting the limit upward – indirectly putting smaller pools out of business and further centralizing mining. This is why Garzik proposed the threshold; he believes the block size should be raised only if a supermajority of miners (81 percent) agree. Or put differently: he believes that smaller mining pools representing 21 percent of hashing power should have “veto power” to keep the limit low.

Source: https://bitcoinmagazine.com/21747/closer-look-bip100-block-size-proposal-bitcoin-miners-rallying-behind/


This sounds like a sort of Connecticut Compromise for Bitcoin, and we haven't even gotten to the Three-Fifths Compromise yet.

[mmortal03]

BIP101 does not immediately jump from 8 mb to 8 gb. It increases linearly over the course of several years.

That kind of misinformation isn't useful.

It increases exponentially, not linearly, doubling every 2 years for 20 years. 10 doublings, giving a 1024x increase. On top of the initial 8x increase, making an effective increase of 8192x.

It is not a surprise that you are pushing the most dangerous solution (8MB straight away and then x2 every year until 8GB are reached) that will probably lead to complete centralization and thus the death of Bitcoin.

Maybe we should increase the limit slightly. I am ok with pretty much all proposals except Gavins, which has what I consider very aggressive increases to 8mb then 8gb.

8 GB would be in 2036. That's 21 *years* from now, people.

[canth]

BIP101 does not immediately jump from 8 mb to 8 gb. It increases linearly over the course of several years.

That kind of misinformation isn't useful.

It increases exponentially, not linearly, doubling every 2 years for 20 years. 10 doublings, giving a 1024x increase. On top of the initial 8x increase, making an effective increase of 8192x.

It is not a surprise that you are pushing the most dangerous solution (8MB straight away and then x2 every year until 8GB are reached) that will probably lead to complete centralization and thus the death of Bitcoin.

Maybe we should increase the limit slightly. I am ok with pretty much all proposals except Gavins, which has what I consider very aggressive increases to 8mb then 8gb.

8 GB would be in 2036. That's 21 *years* from now, people.

To that point, in 1995 - this was cutting edge: http://winsupersite.com/article/commentary/blast-buying-computer-1995-141723

CPU - Pentium-90
Motherboard - PCI/ISA combo
Memory - 8 or 16 Mb
Hard Drive - 540 Mb or more
Monitor - 15” flat screen, .28 dot   pitch
Video Card - 1-2 Mb video RAM
double speed CD-ROM
16-bit Sound Blaster or 100% compatible
3-1/2” High Density Floppy Drive
MS-DOS 6.22 / Windows 3.11
expected cost: $3000-3800

Seriously - a 500mb HDD and 56K down / 33.6K up connection speeds - the above didn't even include a modem. In 2036, today's 4TB HDD, 8GB of memory and 25mb/s internet connection will seem equally pathetic as this PC does to us now.