Soft block size limit reached, action required by YOU

[Mike Hearn]

By default Bitcoin will not created blocks larger than 250kb even though it could do so without a hard fork. We have now reached this limit. Transactions are stacking up in the memory pool and not getting cleared fast enough.

What this means is, you need to take a decision and do one of these things:

• Start your node with the -blockmaxsize flag set to something higher than 250kb, for example -blockmaxsize=1023000. This will mean you create larger blocks that confirm more transactions. You can also adjust the size of the area in your blocks that is reserved for free transactions with the -blockprioritysize flag.
• Change your nodes code to de-prioritize or ignore transactions you don't care about, for example, Luke-Jr excludes SatoshiDice transactions which makes way for other users.
• Do nothing.

If everyone does nothing, then people will start having to attach higher and higher fees to get into blocks until Bitcoin fees end up being uncompetitive with competing services like PayPal.

If you mine on a pool, ask your pool operator what their policy will be on this, and if you don't like it, switch to a different pool.

[playtin]

Mike, you forgot to mention that this will not fork the block chain - otherwise your posting could result in even more threads about a hard fork by someone uninformed

[Mike Hearn]

Good point, fixed.

[cedivad]

Where is the foundation during the only moment we need it?

[Akka]

Well, I'm curious to see how this works out. Hopefully the most pools will not increase their Blocksize limit so we get a good simulation of how the Bitcoin environment behaves when we bump against a limit.

[Mike Hearn]

We are already bumping up against a limit. No simulation needed. We have reality instead ...

[Akka]

We are already bumping up against a limit. No simulation needed. We have reality instead ...

OK, wrong word. Still I hope that most pools will not immediately lift / increase their limit. So we know what will happen when we reach the hard limit, which can't be changed so easily.

So let us bump against this for a few month. And lift it only if it really damages Bitcoin.

[Luke-Jr]

Note this isn't really a problem if miners are responsible and filter out the SatoshiDice flooding.
My git repository contains a "block_dice" branch to do just that.
The 0.8.0.eligius branch designed specifically for miners and pools also includes this.
Gavin also wrote up some more advanced configuration option examples here.

[[Coins!]]

Mike, have you contacted mining pool operators individually ?

[Mike Hearn]

No. I don't have their contact details, and even if I did, this is the wrong way to solve such issues.

Miners (all miners) need to understand what they're doing. The time when people could just click "Generate coins" and be done with it are long gone. It's very important that miners monitor the health of the network and understand what their software is doing.

For pools, the operators need to state what their block construction policies are, and the people with the hardware need to understand those policies and find pools with good ones.

That's far more than I or anyone else can do alone. Miners need to hold their pools accountable.

[MPOE-PR]

Change your nodes code to de-prioritize or ignore transactions you don't care about, for example, Luke-Jr excludes SatoshiDice transactions which makes way for other users.

Actually the right way to solve such issues is to post this sort of bullshit drama here so that we can see that Mike Hearn is the sort of irrelevant muppet nobody cares about.

It's one thing if I just say it, it's another if he says it and time proves it.

[deepceleron]

Add an additional .001 optional fee in your client and your transaction will be in the next block. The blockchain flooders are cheapskates. Transactions are not supposed to be cheap enough that you can blast hundreds of them out an hour with your gambling bot.

[eleuthria]

BTC Guild started setting up a new server this morning running modified block rules.  Currently trying out a 500,000 byte maxblocksize.  The problem is with larger blocks, you increase the chance of orphans since it will take at least twice as long to propagate, if not more.  I've modified the fee settings to prefer fee based transactions when increasing the block size past 50 KB, so hopefully the increase in fees per block offset the orphan rate increase.

[420]

by a node this means a miner right?

ALSO: what if satoshidice just switched all their internal transactions to LTC network?

would this be possible and help

just a thought

[Smoovious]

What is the hard limit for block size anyways?

-- Smoov

[pyra-proxy]

Way I see it is if satoshi dice is such a problem then they need to shutdown and come up with a new idea or the community should boycott them if they prefer a functioning financial system over an entertainment site...  alternatively bit coin could solve its block chain bloat problem... of which very many very sound ideas have been proposed but it seems as if the powers at be won't care until its too late... but whatever let's just enjoy the ride while it lasts right? :-)

[grue]

how about no? because I don't want encourage some gambling website to fill up my hard drive with their bets.

[scintill]

how about no? because I don't want encourage some gambling website to fill up my hard drive with their bets.

Then don't let sdice transactions into your solved blocks, and encourage others to do the same.  Mike didn't say you have to increase the soft limit.  Luke-Jr posted about your other options.

Personally, banning sdice outright seems like the kind of scummy meddling bitcoin is supposed to solve.  I would rather make them pay transaction fees somewhat proportional to the cost they incur on the network.  If they pay them, miners get more money for their trouble, if not, they stop spamming the chain.

[disclaimer201]

I lost a lot of money today because of this shit. And I don't care for satoshi dice. Let them move to litecoin or ban them from spamming the network and my harddrives.

[pyra-proxy]

how about no? because I don't want encourage some gambling website to fill up my hard drive with their bets.

Then don't let sdice transactions into your solved blocks, and encourage others to do the same.  Mike didn't say you have to increase the soft limit.  Luke-Jr posted about your other options.

Personally, banning sdice outright seems like the kind of scummy meddling bitcoin is supposed to solve.  I would rather make them pay transaction fees somewhat proportional to the cost they incur on the network.  If they pay them, miners get more money for their trouble, if not, they stop spamming the chain.

Free market to do something also incurs the the possibility that others may not want to assist or be accomplice ... ie. While I may allow any transaction that offers minimum+ fees, I can't fault others for using blacklists preventing them from being forced to process transactions relating to things they don't agree with.  In reality I'd kind of like to start using a black list regarding known silk road processors and mixing services myself because they IMHO relate (semi-)directly to human injustices not just free market... s.dice I'd consider including only because the implementation they have currently is detrimental to the health and viability of bit coin at least until block chain bloat solutions are tested and implemented.

[SRoulette]

how about no? because I don't want encourage some gambling website to fill up my hard drive with their bets.

Then don't let sdice transactions into your solved blocks, and encourage others to do the same.  Mike didn't say you have to increase the soft limit.  Luke-Jr posted about your other options.

Personally, banning sdice outright seems like the kind of scummy meddling bitcoin is supposed to solve.  I would rather make them pay transaction fees somewhat proportional to the cost they incur on the network.  If they pay them, miners get more money for their trouble, if not, they stop spamming the chain.

It does seem like the decent thing to do, for our casino we simply pay the network requested fees on all out payouts and adjust our margins and payouts to compensate. We even modified our dice game to make losing payouts an option for the players.

We like satoshidice (we kind of have to, we modelled some of our games after them) but we would like to see them take a more active involvement in resolving this issue that affects us all.

[mrb]

BTC Guild started setting up a new server this morning running modified block rules.  Currently trying out a 500,000 byte maxblocksize.  The problem is with larger blocks, you increase the chance of orphans since it will take at least twice as long to propagate, if not more.  I've modified the fee settings to prefer fee based transactions when increasing the block size past 50 KB, so hopefully the increase in fees per block offset the orphan rate increase.

What do you mean you have modified the fee settings? Were you not doing what the Bitcoin client has always been doing? In other words: 27kB for storing high-priority transactions (regardless of the fee), and the remainder of the block always preferring fee-based transactions.

And I don't care for satoshi dice. Let them move to litecoin or ban them from spamming the network and my harddrives.

Well. I am partaged on what to think about satoshidice. On one hand they pollute the block chain, but on the other hand they do help stress-test bitcoin's technical limits in the real world relatively early in its history.

[Peter Todd]

Add an additional .001 optional fee in your client and your transaction will be in the next block. The blockchain flooders are cheapskates. Transactions are not supposed to be cheap enough that you can blast hundreds of them out an hour with your gambling bot.

This.

I'm running a timestamping service that's been making about two or three transactions an hour for the past few days, each with 0.0005BTC fees. Looks like about 90% to 95% of my transactions are confirming in the next block, and the rest within another block.

Seriously, if you can't spend a 0.001BTC - a bit less than 5 cents - to publish a transaction that thousands of computers have to verify and store for eternity in the one rock-solid high value decentralized currency known to man, stop complaining. I'm surprised the large-blocks/low-fees group hasn't been compared to the usual socialists wanting to centralize profit and decentralized costs yet... or maybe they have - following the forums with this crap is a full-time job.

You know, my timestamping thing, OpenTimestamps if you want to know,(1) has been called blockchain spam by some. For the technically inclined, no it doesn't bloat the UTXO space, but it does add blockchain space. However, it and other abuses like storing files in the blockchain will naturally be crowded out as transactions become more expensive, so the total damage will always be limited without centralized enforcement efforts like Mike's pleadings for miner's to "stop the satoshidice spam". Already TX fees would cost me $100USD/month to run the timestamper if every block had a timestamp transaction in it, so I'll soon have plenty of reasons to change the way it works, just like the price of gas gives people incentives not to waste it.

On the other hand, if we go ahead and let the maximum block size get as large as miners want, there's no reason not to use it for all sorts of BS things, and little we can do to stop abuse without centralization. Sadly, I suspect as it becomes more and more expensive to participate as a full-fledged miner, instead we'll just see the number of pools decrease, and P2Pool die off from lack of miners, until central efforts to "stop spam transactiosn" start happening, and then you're one step away from "stop silk road" being possible.

1) FWIW, it's not quite ready to be called production yet, but if you can find the software on github, go ahead and try it out.

[eleuthria]

BTC Guild started setting up a new server this morning running modified block rules.  Currently trying out a 500,000 byte maxblocksize.  The problem is with larger blocks, you increase the chance of orphans since it will take at least twice as long to propagate, if not more.  I've modified the fee settings to prefer fee based transactions when increasing the block size past 50 KB, so hopefully the increase in fees per block offset the orphan rate increase.

What do you mean you have modified the fee settings? Were you not doing what the Bitcoin client has always been doing? In other words: 27kB for storing high-priority transactions (regardless of the fee), and the remainder of the block always preferring fee-based transactions.

The old settings were default, with the 250,000 byte limit, 27k for high-priority (regardless of fee).  The new settings we're trying (subject to change, and not on all servers yet) is 500kB block max size, no reserved space for no-fee transactions with high priority, and a minimum size set to 50 kB to grab high priority/no-fee transactions if there aren't that many unconfirmed paid transactions.

[optimator]

I lost a lot of money today because of this shit. And I don't care for satoshi dice. Let them move to litecoin or ban them from spamming the network and my harddrives.

Sorry to hear about your financial loss. That sucks.

But, I must say, it rubs me wrong when I hear complaints about "spamming the blockchain" and the evil of satoshi dice. Where do you see bitcoin going? Do you want to keep it as a little pet or do you want it to become a global currency beyond the borders of governments?

Clearly, the way bitcoin was designed was to encourage the gradual adoption of transaction fees, as those fees will replace the revenue lost from the block reward halvings. However, those transaction fees will go to the miners and the nodes will still need to store the transactions.

I see the "solution" to these problems as designing ways to creatively solve the "problem". For example, implementing a parsed version of the blockchain to remove older transactions.

We shouldn't run from or discourage satoshi dice, we need to embrace it as a precursor of what is to come.

Cheers!

[Smoovious]

Personally, I see the miners who are refusing all transactions (so their blocks propagate faster, less chance of orphans), who are only mining for the reward, completely ignoring that the purpose of mining is to process transactions in the first place, as being a bigger problem than Satoshi Dice is.

As long as Satoshi Dice's transactions are following the rules, that's all that matters to me. I don't care what the purpose the transactions are for. Not my business.

Look at the block explorer from time to time. I see plenty of found blocks that have 0 transactions in it, just the reward generation.

That is the big problem.

-- Smoov

[phelix]

BTC Guild started setting up a new server this morning running modified block rules.  Currently trying out a 500,000 byte maxblocksize.  The problem is with larger blocks, you increase the chance of orphans since it will take at least twice as long to propagate, if not more.  I've modified the fee settings to prefer fee based transactions when increasing the block size past 50 KB, so hopefully the increase in fees per block offset the orphan rate increase.

this is very interesting and might actually be a good thing that leads to a balanced blocksize. Transactions actually do come at a cost for miners!

[...]
The old settings were default, with the 250,000 byte limit, 27k for high-priority (regardless of fee).  The new settings we're trying (subject to change, and not on all servers yet) is 500kB block max size, no reserved space for no-fee transactions with high priority, and a minimum size set to 50 kB to grab high priority/no-fee transactions if there aren't that many unconfirmed paid transactions.

hmmm...

https://bitcointalk.org/index.php?topic=148211   Can anybody stall Bitcoin for 72BTC per hour?

[johnyj]

I don't understand why gaming has to use the blockchain, feels like using armored money transport vehicles to transfer casino chips  

[🏰 TradeFortress 🏰]

Note this isn't really a problem if miners are responsible and filter out the SatoshiDice flooding.
My git repository contains a "block_dice" branch to do just that.
The 0.8.0.eligius branch designed specifically for miners and pools also includes this.
Gavin also wrote up some more advanced configuration option examples here.

Yes, this is a problem because 50% of TXes would never confirm.

[Luke-Jr]

As long as Satoshi Dice's transactions are following the rules, that's all that matters to me. I don't care what the purpose the transactions are for. Not my business.

SatoshiDice does not follow the rules:
The blockchain is a system for transferring value, of which the final total is specified in advance. Those are the terms of the social contract every Bitcoin holder has adopted understanding. Those are the terms every node has agreed to voluntarily participate in the network.
Nodes and miners have not unanimously agreed to have their resources/time spent inefficently processing informational messages like "you lose", "you win", or even "I bet on <this> game with <this> much". This was never part of the agreement.
Nor is the system supposed to hold up to flooding. If you go back to even the original paper by Satoshi, miners are expected to filter out flooding attacks like this. The proposed transaction fee solution works in most cases, but not SatoshiDice because they have social-engineered gamblers into covering the fees for them, and to make it worse the gamblers are willing to pay a higher fee than real users. If Bitcoin had achieved critical mass already, we might have been able to just say "too bad, deal with higher fees", but at this pre-adoption stage the response to that would almost certainly be "screw you, I'll stick with VISA".

Note this isn't really a problem if miners are responsible and filter out the SatoshiDice flooding.
My git repository contains a "block_dice" branch to do just that.
The 0.8.0.eligius branch designed specifically for miners and pools also includes this.
Gavin also wrote up some more advanced configuration option examples here.

Yes, this is a problem because 50% of TXes would never confirm.

No, filtering out flooding attacks responsibly improves confirmation time of transactions.

[K1773R]

Note this isn't really a problem if miners are responsible and filter out the SatoshiDice flooding.
My git repository contains a "block_dice" branch to do just that.
The 0.8.0.eligius branch designed specifically for miners and pools also includes this.
Gavin also wrote up some more advanced configuration option examples here.

is there a simple patchfile available to exclude SD?

[Luke-Jr]

Note this isn't really a problem if miners are responsible and filter out the SatoshiDice flooding.
My git repository contains a "block_dice" branch to do just that.
The 0.8.0.eligius branch designed specifically for miners and pools also includes this.
Gavin also wrote up some more advanced configuration option examples here.

is there a simple patchfile available to exclude SD?

$ git diff 5b98972..block_dice | wgetpaste
Your paste can be seen here: http://codepad.org/7RQZIkhd

[Akka]

Personally, I see the miners who are refusing all transactions (so their blocks propagate faster, less chance of orphans), who are only mining for the reward, completely ignoring that the purpose of mining is to process transactions in the first place, as being a bigger problem than Satoshi Dice is.

As long as Satoshi Dice's transactions are following the rules, that's all that matters to me. I don't care what the purpose the transactions are for. Not my business.

Look at the block explorer from time to time. I see plenty of found blocks that have 0 transactions in it, just the reward generation.

That is the big problem.

-- Smoov

I agree this is a point.

I know mining is a (mostly) free marked. But this guys are basically hurting the bitcoin users.

Wouldn't it be possible to thread this behavior as an attack on bitcoin, therefor not accepting this blocks, when there is a significant amount of transactions required?

Something like: if unconfirmedtransaktions >= 1000kb and blocksize <= 150kb then
reject block

Of course at least 51% of all miners would have to agree to this, otherwise miners that agree would only hurt them self.

[Luke-Jr]

Personally, I see the miners who are refusing all transactions (so their blocks propagate faster, less chance of orphans), who are only mining for the reward, completely ignoring that the purpose of mining is to process transactions in the first place, as being a bigger problem than Satoshi Dice is.

As long as Satoshi Dice's transactions are following the rules, that's all that matters to me. I don't care what the purpose the transactions are for. Not my business.

Look at the block explorer from time to time. I see plenty of found blocks that have 0 transactions in it, just the reward generation.

That is the big problem.

-- Smoov

I agree this is a point.

I know mining is a (mostly) free marked. But this guys are basically hurting the bitcoin users.

Wouldn't it be possible to thread this behavior as an attack on bitcoin, therefor not accepting this blocks, when there is a significant amount of transactions required?

Something like: if unconfirmedtransaktions >= 1000kb and blocksize <= 150kb then
reject block

Of course at least 51% of all miners would have to agree to this, otherwise miners that agree would only hurt them self.

It's not that simple. For example, it's pretty common for SD's flooding to fill more than 1000kb, so your rule would reject blocks from only the responsible miners.

[K1773R]

Note this isn't really a problem if miners are responsible and filter out the SatoshiDice flooding.
My git repository contains a "block_dice" branch to do just that.
The 0.8.0.eligius branch designed specifically for miners and pools also includes this.
Gavin also wrote up some more advanced configuration option examples here.

is there a simple patchfile available to exclude SD?

$ git diff 5b98972..block_dice | wgetpaste
Your paste can be seen here: http://codepad.org/7RQZIkhd

thanks

[dustintrammell]

I don't understand why gaming has to use the blockchain, feels like using armored money transport vehicles to transfer casino chips  

It doesn't, and in my opinion is the wrong thing to do.  My site, BitDraw (provably fair features coming soon!) of course uses the blockchain to process deposits and withdrawals, as it must, but all other transactions between players, or between the players and the site, are handled within our system and are not exposed to the blockchain.

Further, games, applications, and other sites that are integrated directly into the Bitcoin network have increased attack surface.  By being integrated, they necessarily must have direct access (or a more intricate abstraction layer) to either bitcoind or the Bitcoin network directly.  This means that they have access to one or more wallets, which increases the risk of funds in those wallets being stolen by an attacker that compromises that system.  BitDraw avoids this entirely by using an offline wallet, not having any access to it from the web application or server itself, and handling withdrawals via manual processing.  The latter won't scale, but we'll address that when it actually becomes an issue.

[dustintrammell]

The blockchain is a system for transferring value, of which the final total is specified in advance. Those are the terms of the social contract every Bitcoin holder has adopted understanding. Those are the terms every node has agreed to voluntarily participate in the network.
Nodes and miners have not unanimously agreed to have their resources/time spent inefficently processing informational messages like "you lose", "you win", or even "I bet on <this> game with <this> much". This was never part of the agreement.

Would the latter two of those "messages" not represent a transfer of value, of which you just stated that Bitcoin is a system for?  I presume (I haven't looked at exactly how Satoshi Dice works) that when you place a wager, the player is transferring value to Satoshi Dice.  Then, if they win, Satoshi Dice is transferring value back.  I see no transfer of value in the "You Lose" message as I would assume Satoshi Dice keeps the value, so I completely agree with you there, that would be a completely informational message.

[hazek]

Where is the foundation during the only moment we need it?

Where it should be - silent.

[Luke-Jr]

The blockchain is a system for transferring value, of which the final total is specified in advance. Those are the terms of the social contract every Bitcoin holder has adopted understanding. Those are the terms every node has agreed to voluntarily participate in the network.
Nodes and miners have not unanimously agreed to have their resources/time spent inefficently processing informational messages like "you lose", "you win", or even "I bet on <this> game with <this> much". This was never part of the agreement.

Would the latter two of those "messages" not represent a transfer of value, of which you just stated that Bitcoin is a system for?  I presume (I haven't looked at exactly how Satoshi Dice works) that when you place a wager, the player is transferring value to Satoshi Dice.  Then, if they win, Satoshi Dice is transferring value back.  I see no transfer of value in the "You Lose" message as I would assume Satoshi Dice keeps the value, so I completely agree with you there, that would be a completely informational message.

While there is a value attached to the latter two, it is primarily a message. Otherwise, a gamer would just transfer a deposit, play, and withdraw (as I notice your site does) - no message passing involved.

For an easy analogy, this would be like WalMart charging your credit card for every item you pick up off the shelf, and refunding you if you put it back (actually worse, since SD uses 2 transactions for every action).
Not even VISA/MC could handle that kind of abuse, and their system (being centralised) is far more efficient than Bitcoin.

[Mike Hearn]

BTC Guild started setting up a new server this morning running modified block rules.  Currently trying out a 500,000 byte maxblocksize.  The problem is with larger blocks, you increase the chance of orphans since it will take at least twice as long to propagate, if not more.  I've modified the fee settings to prefer fee based transactions when increasing the block size past 50 KB, so hopefully the increase in fees per block offset the orphan rate increase.

I'm actually hopeful that you won't notice much difference in propagation times.

We're talking about 500kb data structures here. Any mining pool worth its salt is running out of decent colo facilities in the USA or Europe with good connectivity. Transmission time is negligible at current sizes. The slow part is validation and disk IO. However Bitcoin 0.8 has two features that should make acceptance of a new block fast:

1) The signature cache means that when you see a transaction appear in a block, you are very likely to have already checked its signatures when it was previously broadcast through the memory pool (your node is "warm"), so there's little or no ECDSA computations required.
2) LevelDB means the difficult parts of managing the disk is done on a separate thread. In theory you should need only a handful of disk IOPs to accept a new block because all the compaction is done on a separate core in the background.

I think it should be quite feasible to accept and announce a new block in something like 30-40 msec.

So I'll be very interested to see if practice matches theory - if it does then you should not see a 2x propagation time, certainly not more than 2x. And if you do then we just need to fix it

[Luke-Jr]

BTC Guild started setting up a new server this morning running modified block rules.  Currently trying out a 500,000 byte maxblocksize.  The problem is with larger blocks, you increase the chance of orphans since it will take at least twice as long to propagate, if not more.  I've modified the fee settings to prefer fee based transactions when increasing the block size past 50 KB, so hopefully the increase in fees per block offset the orphan rate increase.

I'm actually hopeful that you won't notice much difference in propagation times.

We're talking about 500kb data structures here. Any mining pool worth its salt is running out of decent colo facilities in the USA or Europe with good connectivity. Transmission time is negligible at current sizes. The slow part is validation and disk IO. However Bitcoin 0.8 has two features that should make acceptance of a new block fast:

1) The signature cache means that when you see a transaction appear in a block, you are very likely to have already checked its signatures when it was previously broadcast through the memory pool (your node is "warm"), so there's little or no ECDSA computations required.
2) LevelDB means the difficult parts of managing the disk is done on a separate thread. In theory you should need only a handful of disk IOPs to accept a new block because all the compaction is done on a separate core in the background.

I think it should be quite feasible to accept and announce a new block in something like 30-40 msec.

So I'll be very interested to see if practice matches theory - if it does then you should not see a 2x propagation time, certainly not more than 2x. And if you do then we just need to fix it

You're forgetting that every node needs to receive, then process (incl signature checks) each block before it even begins relaying it to its next peers.

[Mike Hearn]

I didn't forget that - that's where my estimate comes from.

Signature checks are free assuming your have a warm node and actually saw the broadcasts of the transactions in the blocks, because of the sig cache.

Receive/send of a 500kb piece of data should be extremely fast for most mining pools. I haven't bothered to calculate transmission time, but it's going to be really low.

Latency of the inv/getdata cycle is should be around 500msec even if you are going across the Atlantic, unless your main loop is excessively loaded.

Disk IOPs to write the database batch to the leveldb log file might be a handful of seeks if you're on a mostly unfragmented disk - 30-40msec.

Misc additional processing time? Negligible again.

[os2sam]

Two questions:

How was this soft block size limit derived?  And why?

What is the Hard block size limit?

Sam

[arklan]

Two questions:

How was this soft block size limit derived?  And why?

What is the Hard block size limit?

Sam

well. the hard limit is 1 megabyte, and this is 1/4th that. i think the answer to your second question  answers your first, yes?

[os2sam]

Two questions:

How was this soft block size limit derived?  And why?

What is the Hard block size limit?

Sam

well. the hard limit is 1 megabyte, and this is 1/4th that. i think the answer to your second question  answers your first, yes?

Well no, not really.  The block size should be regulated by fee's not an artificial cap.

Thanks for the answer to my last question though.
Sam

[drawingthesun]

Well no, not really.  The block size should be regulated by fee's not an artificial cap.

Thanks for the answer to my last question though.
Sam

This is correct, or Bitcoin will be replaced by another. Do the devs really think people will be ok with Bitcoin, a currency worth 100 Billion in 20 years, with a 1MB blocksize cap? Nope.

If the Devs really think SD is a problem, they haven't seen anything yet. Bitcoin can't handle more than 1000 transactions a second? There is no way a Bitcoin will have value in 20 years!

Why are they so stubborn? This is the single biggest hole in our Bitcoin fantasy.

[Mike Hearn]

So, to be clear, "the devs" is not a single unified hive mind

I actually want to see the block size limit removed, Bitcoin to scale up, and after that sort of thing is done SatoshiDice type sites won't be as much of an issue anymore. I think Gavin feels the same way, as does sipa. Not sure how Matt feels.

retep (Peter Todd) doesn't feel that way, however, though he's written some great posts and useful patches, he hasn't been working on Bitcoin as long as Gavin or I have.

Luke-Jr has the most extreme view of all of us, he sees SD as being abusive and filters out their transactions from his pool.

I included the option of filtering SD transactions out in my initial post because that's a short-term hack that buys additional time, if for some reason expanding the soft limit is not deemed acceptable or is insufficient. I don't think that'll be the case though.

[Zangelbert Bingledack]

A few years (or maybe even months) from now, we will look back at blocking SD like rearranging deck chairs on the Titanic. SD may be shady and abusive, but WELCOME TO THE JUNGLE BABY! Personal feelings and vendettas about inappropriate uses of the blockchain are going to look really silly when serious volume and attacks are unleashed at a dizzying pace in this exponential growth environment.

[matakaonew]

I really think it is better to rise the transaction size, the idea to filter someone like satoshiDice goes directly against all our freedom philosophy. everyone should be able to use the network like if they where anonymous. Whe just can't use information about satoshi to arbitrary censor it. That's just wrong.

thx for reading! i'm new here because i love the principles of bitcoin.

[dirksizzlebod]

I lost a lot of money today because of this shit. And I don't care for satoshi dice. Let them move to litecoin or ban them from spamming the network and my harddrives.

If bitcoin miners can't handle one high frequency gambling game, bitcoin is totally fucked.

[stewdk]

Filtering out satoshidice transactions would make it trivial to double spend a losing bet.  Therefore I think it would be a bad idea for mining pool operators to make satoshidice transactions low priority or reject them alltogether.
If you make a bet on satoshidice, you will usually know if it lost before getting any confirmations.  If miners prioritized non-satoshidice transactions, then all you need to do to cancel your losing bet is double spend the coins with a high transaction fee.

More info is here: https://bitcointalk.org/index.php?topic=130764.0

Rejecting SD transactions is NOT a solution.

[drawingthesun]

So, to be clear, "the devs" is not a single unified hive mind

I actually want to see the block size limit removed, Bitcoin to scale up, and after that sort of thing is done SatoshiDice type sites won't be as much of an issue anymore. I think Gavin feels the same way, as does sipa. Not sure how Matt feels.

retep (Peter Todd) doesn't feel that way, however, though he's written some great posts and useful patches, he hasn't been working on Bitcoin as long as Gavin or I have.

Luke-Jr has the most extreme view of all of us, he sees SD as being abusive and filters out their transactions from his pool.

I included the option of filtering SD transactions out in my initial post because that's a short-term hack that buys additional time, if for some reason expanding the soft limit is not deemed acceptable or is insufficient. I don't think that'll be the case though.

That's good to know some Dev's agree that the blocksize is an issue.
I see the potential of Bitcoin being a global currency, and its this hedge that gives it value even today. If most people knew that Bitcoin can only currently scale to perhaps double or triple its current volume without problems then i'd wager Bitcoin would not be going up in value, people really think Bitcoin can replace the banks, VISA, MasterCard, PayPal, etc... In reality Bitcoin can not scale to this level.

A few years (or maybe even months) from now, we will look back at blocking SD like rearranging deck chairs on the Titanic. SD may be shady and abusive, but WELCOME TO THE JUNGLE BABY! Personal feelings and vendettas about inappropriate uses of the blockchain are going to look really silly when serious volume and attacks are unleashed at a dizzying pace in this exponential growth environment.

I totally agree, all this fuss over SD? Do they have any idea what will happen if this takes off? And if they want to keep 1MB then I can not fathom Bitcoin becoming the cryto-currency of choice. If we can't solve this then another will. The 1MB limitation is massive.

I really think it is better to rise the transaction size, the idea to filter someone like satoshiDice goes directly against all our freedom philosophy. everyone should be able to use the network like if they where anonymous. Whe just can't use information about satoshi to arbitrary censor it. That's just wrong.

thx for reading! i'm new here because i love the principles of bitcoin.

Exactly, so apparently now certain pools are refusing SD. I never knew this and I think its disgraceful, why are Bitcoin's worth $40+ and in the future $hundreds+? Because people think this is the network that will change the world, a 10 minute 1MB block won't change the world though. PayPal/banks/MasterCard will laugh us into $0 Bitcoin territory. (I think my local bank processes more transactions per second than Bitcoin can handle maxing out the 1MB, and this is a small outback branch in Australia)

I lost a lot of money today because of this shit. And I don't care for satoshi dice. Let them move to litecoin or ban them from spamming the network and my harddrives.

If bitcoin miners can't handle one high frequency gambling game, bitcoin is totally fucked.

Your right, Bitcoin is fucked if we can't sort this out, and filtering SD is the most stupid solution. With so many different blocksize solutions being posted I don't understand the willingness to ignore them. Who cares if we create a hard fork? We will have Bitcoin in both and the network that can scale correctly will win.(hopefully)

[HappMacDonald]

Say Luke, in the patch you posted in this thread could I get you to elaborate a little bit on the function CScript::IsBlacklisted()? This seems to be the razor which decides whether the txn will be allowed or not, but i'm not sure how to interpret the conditionals.

Thank ye, sir. :3

[K1773R]

Code:

bool CScript::IsBlacklisted() const
{
    return (this->size() > 6 &&
            this->at(0) == OP_DUP &&
            this->at(3) == 0x06 &&
            this->at(4) == 0xf1 &&
            this->at(5) == 0xb6);
}

this matches the first 3 bytes of the OP_HASH160 (which creates the bitcoin address of SD)

some random SD tx: http://blockchain.info/tx/808154d43bbcff2f23e9dbfb87cc04c58222633f9cbb407f9e33a9821a51f669
and click on "Show scripts", scroll down and u see why

EDIT: posted wrong SD tx, fixed.

[Anon136]

Well no, not really.  The block size should be regulated by fee's not an artificial cap.

Thanks for the answer to my last question though.
Sam

This is correct, or Bitcoin will be replaced by another. Do the devs really think people will be ok with Bitcoin, a currency worth 100 Billion in 20 years, with a 1MB blocksize cap? Nope.

If the Devs really think SD is a problem, they haven't seen anything yet. Bitcoin can't handle more than 1000 transactions a second? There is no way a Bitcoin will have value in 20 years!

Why are they so stubborn? This is the single biggest hole in our Bitcoin fantasy.

it only means that we will inevitably need to embrace multiple blockchains. They could be clones of bitcoin or they could be competing cryptocurrencies like litecoin. With a little luck cryptocurrency echanges will be decentralized censorship resistant and ubiquitous in the future. If this is the case than this will make the whole problem a non problem. I dont think this means is that bitcoin will be worth nothing some day, what i do think this means is that bitcoin as we know it has a soft cap on its value. Probably this cap is much higher than 43 dollars or w/e bitcoin is valued at right now.

[mintymark]

> apparently now certain pools are refusing SD. I never knew this and I think its disgraceful

+1 to this.

Isn't this whats called a which hunt? Certain Bitcoin users being filtered out according to who they are? what happened to anonymity ? what happened to fairness? This is not in accordence with what most people understand to be the principles of Bitcoin.

This is not the solution to this problem.

[drawingthesun]

it only means that we will inevitably need to embrace multiple blockchains. They could be clones of bitcoin or they could be competing cryptocurrencies like litecoin. With a little luck cryptocurrency echanges will be decentralized censorship resistant and ubiquitous in the future. If this is the case than this will make the whole problem a non problem. I dont think this means is that bitcoin will be worth nothing some day, what i do think this means is that bitcoin as we know it has a soft cap on its value. Probably this cap is much higher than 43 dollars or w/e bitcoin is valued at right now.

Multiple blockchains sounds like a mess, considering people are putting their faith into these currencies and a lot of their value comes from scarcity, i'm not sure there is going to be a future with a lot of alt-chains with similar prices. I imagine 1 chain/system will emerge and it will be the one that really solves the block size issue.

Also the only reason Bitcoins are worth $1 - $100 or even more is because many people think that Bitcoin has no transaction cap at all. People think this is the future and the future does not cap out at 7 transactions a second.

[CIYAM]

This is not the solution to this problem.

The *solution* is at this stage very unclear (thus all the threads about this issue).

Understand that if the max. block size were simply abolished then apart from it being a hard-fork (equals Bitcoin turns into BitcoinA, BitcoinB, etc.) the likelihood of people with average hardware (myself included) deciding to keep using the Satoshi client (i.e. full block chain stored on your hardware) will dramatically be reduced (if it were to grow 10x the size in the next few months I would most likely opt out of doing this).

Understand that also most so-called *miners* are actually just *hashers* (they don't *need* the block chain) - so a likely outcome of an unlimited block size would be that mostly only the *pools* would have the entire block chain (everyone else would end up using lightweight clients).

If this occurred then the entire "decentralisation" of Bitcoin would actually be at risk and this is the *real* problem that needs to be worked out (rather than arguing about the legitimacy or otherwise of SD tx's).

[cedivad]

Where is the foundation during the only moment we need it?

Where it should be - silent.

Why?

[runeks]

I must admit I don't get it. If I were a miner, I would take in the most transactions possible that give me the highest income. If Bitcoin can't function in this way it's broken by design.

As long as Satoshi Dice's transactions are following the rules, that's all that matters to me. I don't care what the purpose the transactions are for. Not my business.

SatoshiDice does not follow the rules:
The blockchain is a system for transferring value, of which the final total is specified in advance. Those are the terms of the social contract every Bitcoin holder has adopted understanding. Those are the terms every node has agreed to voluntarily participate in the network.
Nodes and miners have not unanimously agreed to have their resources/time spent inefficently processing informational messages like "you lose", "you win", or even "I bet on <this> game with <this> much". This was never part of the agreement.

I have not adopted any "social contract". A miner can include whichever transaction he wishes to include. There is no agreement. There is a protocol. The protocol is the agreement, how you use that protocol is completely up to those who use it. As long as they follow the protocol.

For an easy analogy, this would be like WalMart charging your credit card for every item you pick up off the shelf, and refunding you if you put it back (actually worse, since SD uses 2 transactions for every action).
Not even VISA/MC could handle that kind of abuse, and their system (being centralised) is far more efficient than Bitcoin.

What are you talking about? VISA/Mastercard would welcome this with open hands! They make a 3% fee for every transaction in their network. If they see a bottleneck they fix it, cause it's making them truckloads of money!

Refusing to accept fee-paying transactions is like a store-owner getting mad at his customers for emptying his shelves. "What are you doing? You buying all my products leave nothing for all the other people!". The sane approach is to increase prices (fees) if demand is too great.

I included the option of filtering SD transactions out in my initial post because that's a short-term hack that buys additional time [...]

I very much agree with this. Think forward to a situation where 300 "SD"-style services exist, and miners need to maintain 300 different filters to filter out "abusive" transactions. This simply isn't workable.

I really think it is better to rise the transaction size, the idea to filter someone like satoshiDice goes directly against all our freedom philosophy. everyone should be able to use the network like if they where anonymous. Whe just can't use information about satoshi to arbitrary censor it. That's just wrong.

While I agree that filtering out Satoshi Dice transactions seems like a hack, it certainly does not go against any "freedom philosophy". Quite the contrary: not having the freedom to filter out SD transactions would go against our "freedom philosophy". Miners have every right to filter out the transactions they don't want in their block. This is not censorship. No one has a right to get his or her transaction into the block chain. It's a privilege that is increasingly likely to be fulfilled the higher the transaction fee you pay. The trick is to incentivize miners to include transactions by attaching fees to them.

[matakaonew]

I really think that if bitcoin can't adapt to a very broad spectrum of events, like the mini crash of yesterday, another cryptocurrency will win the race. It's not that we have to win, by no mean, but we must continue to make bitcoin the best, with all we got witch is strongly related to winning the crypto-currency race.

So, the block size limit should be raised and should even adapt itself to the needs of the network. The only concern i can credit is if there is no limit, witch may brings centralization pretty fast.

The limits should be a function of the number of transaction pending in order that they get in the block chain with an expected waiting time of around 10 minutes.

i'm still new to bitcoin logic but something as simple as that could evaluate real time transaction size limit.

(Nb of transaction pending * mean transaction size (kb))/C

or if it is more usefull

(Size of all transaction pending)/C

Where C is a fine tune constant near 1 or exactly 1. if it is exactly one, someone will eventually confirm a block containing all the transaction (pending at time = some time) witch may not be what we want tough.

the idea is to accept a confirmed block only if, at time=t, the size limit chosen by the pool was under or equal to this hard limit. This way no miner can choose to work on a very large block and work out all the transaction by himself)

[niko]

I actually want to see the block size limit removed, Bitcoin to scale up, and after that sort of thing is done SatoshiDice type sites won't be as much of an issue anymore. I think Gavin feels the same way, as does sipa. Not sure how Matt feels.

@Mike: for the sake of informed discussion here, would you please briefly explain the economics of fees in the scenario you are proposing? What is the incentive for payers to include fees, and for miners to keep mining?

[muyuu]

Satoshidice just rushed us into this situation. But let's be clear: we'd eventually get here if adoption rises to somewhere remotely close to mainstream.

Luke's patch is fine, but either enforcing some fees or reducing block size sound like the way things will eventually have to go.

[VinceSamios]

Frankly - blaming satoshi dice is fucking retarded.

What is the point of bitcoin afterall? It's buying stuff, it's sending money, it's gambling, it's everything a currency is used for. That includes Satoshi Dice.

Solve the problem, don't go blaming a site which has arguably done more for bitcoin than any other.

Bitcoin needs to be able to handle 5000 transactions per second, eventually.

[CIYAM]

Bitcoin needs to be able to handle 5000 transactions per second, eventually.

Why?

[bitplane]

Bitcoin needs to be able to handle 5000 transactions per second, eventually.

Why?

Because:

VisaNet Peak Message Rate: 8,442 transaction messages per second sustained average over a one hour period

[muyuu]

Bitcoin needs to be able to handle 5000 transactions per second, eventually.

Why?

Because in real life it doesn't take that many people making purchases and other transactions to reach 5000 t/s. I do as many as 30 per day easily.

5000 t/s makes up 432 million/day. It would only take some 14.4 million people (with a usage pattern similar to mine) evenly distributed across the world to reach that limit. (Much fewer people if they are in the same time zone or close).

Bitcoin must scale to more than 10 million odd people.

[CIYAM]

Bitcoin must to scale to more than 10 million odd people.

Again why?

If # of tx's was the #1 priority then why would you even have a 10 minute confirmation time?

And why bother with even having a 21M limit if all that mattered was the # of tx's?

[os2sam]

Two questions:

How was this soft block size limit derived?  And why?

What is the Hard block size limit?

Sam

well. the hard limit is 1 megabyte, and this is 1/4th that. i think the answer to your second question  answers your first, yes?

Well no, not really.  The block size should be regulated by fee's not an artificial cap.

I actually want to see the block size limit removed, Bitcoin to scale up

Let me be clear, I'm not suggesting that block size limit should be lifted completely, at least not yet.

I would like to know the reasoning behind 1MB hard limit and the 250KB soft limit?  It seems to me that the soft limit is artificial, but maybe not?!?

Sam

[niko]

Bitcoin needs to be able to handle 5000 transactions per second, eventually.

Was that "eventually" intentional? Do you think the limit should be set now to accommodate the anticipated future volume?  If so, are you not concerned with the incentive structure you are imposing between now and then?  Or did you think that the limit should be dynamically adjusted as we go, to (almost) accommodate the growth?

[muyuu]

Bitcoin must to scale to more than 10 million odd people.

Again why?

If # of tx's was the #1 priority then why would you even have a 10 minute confirmation time?

And why bother with even having a 21M limit if all that mattered was the # of tx's?

Who said it was all that mattered?

They matter. They are not the only thing that matters but they do matter. To have 0 transactions you don't need any system. Problem solved! You see? it's just as ridiculous to say that it's ALL that matters as it is to say they don't matter at all.

[CIYAM]

They matter. They are not the only thing that matters but they do matter. To have 0 transactions you don't need any system. Problem solved! You see? it's just as ridiculous to say that it's ALL that matters as it is to say they don't matter at all.

I never said tx's don't matter and if tx's fell to 0 then Bitcoin would die - the question is whether it really has been designed to compete with Paypal/Visa for that purpose.

(it's not an argument of extremes I am trying to make at all)

[drawingthesun]

Bitcoin needs to be able to handle 5000 transactions per second, eventually.

Why?

Its simple, because a currency needs to be spendable. If the network can't handle this many transactions then its not scalable for the world. A lot of people here believe in Bitcoin becoming a global currency, and this is why people are paying a lot of money for a Bitcoin.

I get this feeling some people against the blocksize increase think that 7 transactions a second is fine and Bitcoin will be like gold and it'll be this massive store of wealth. Well if millions of people can't move their wealth around your Bitcoins will be worthless, no matter how many thousands you have.

Bitcoins only have value because people think (incorrectly) that Bitcoin can scale up as a payment network and store of wealth, If you told CNN/BBC and every new adopter that the network is actually capped at a max of 7 transactions a second* and that a decent amount of the main developers think this is fine, and that no one will ever need a transaction volume higher than 1000 transactions a second. Then you will see that $45 drop and it will not recover. It won't recover because another system will take its place.

Remember VISA/MasterCard/PayPal only represent a fraction of money moved in the world. Everyday hundreds of millions of people are paid into their bank accounts from work, billions are moving cash to one another. If bitcoin sticks to 7 transactions a second and another crypto-currency that can handle 10,000 transactions a second comes about, one that allows users to download part of the blockchain and allows users to connect into a node instead of being a entire node themselves, that currency will win.

*I heard from a forum member a while back the max transactions per second is 7 before the 1MB is no longer sufficient.

[muyuu]

Bitcoin needs to be able to handle 5000 transactions per second, eventually.

Was that "eventually" intentional? Do you think the limit should be set now to accommodate the anticipated future volume?  If so, are you not concerned with the incentive structure you are imposing between now and then?  Or did you think that the limit should be dynamically adjusted as we go, to (almost) accommodate the growth?

It's just a judgement call.

If you think the problem will go away before getting there, for some external development - say, Ripple integration or some other hybrid solution becoming common - then yeah, you can opt for Luke's patch and the problem is delayed for likely several years.

If you think this moment is as good as any other to press the community into looking for a solution, then you don't touch the block soft limit and you keep accepting all transactions.

Honestly, I think having people pay fees for the right to bloat the blockchain is something we should do sooner rather than later.

Bitcoin simply doesn't compete with paypal at this point. Only marginally if at all.

[CIYAM]

I get this feeling some people against the blocksize increase think that 7 transactions a second is fine and Bitcoin will be like gold and it'll be this massive store of wealth. Well if millions of people can't move their wealth around your Bitcoins will be worthless, no matter how many thousands you have.

Do people trading Gold need more than 7 tx's per second?

(i.e. do you think Bitcoin would really *die* if that was the limit?)

[Mike Hearn]

I actually want to see the block size limit removed, Bitcoin to scale up, and after that sort of thing is done SatoshiDice type sites won't be as much of an issue anymore. I think Gavin feels the same way, as does sipa. Not sure how Matt feels.

@Mike: for the sake of informed discussion here, would you please briefly explain the economics of fees in the scenario you are proposing? What is the incentive for payers to include fees, and for miners to keep mining?

Payers have no incentive to ever include any fees, including today, because they are not the ones who actually care about double spending risk. After all, you know you're trustworthy, right?

It's actually the recipient that cares about confirmation. And recipients have many ways to incentivize mining. For example, via network assurance contracts, which I have proposed many times in various other discussions. If you see mining as a public good then assurance contracts are a method that's been both widely theoretically studied and implemented in practice (most obviously kickstarter, other examples are around too).

There is also the rather obvious and oft-overlooked fact that mining generates waste heat, and there are lots of people/places that actually need heat. Because mining hardware is small, portable and scalable, if you're already heating something with electrical resistance it may make sense to use mining ASICs instead and at that point you don't really care about the cost. You still need a full node or a pool to take part but I think that'll be easy to run even at high traffic levels.

[deepceleron]

The reduction of Satoshi's 0.01 minimum fee to 0.0005 was an error. A divine design was altered by whims and perceived exponential growth of Bitcoin value, without considering future impact on the network. Whims like those seen all over this forum in the past few weeks.

The transaction volume currently being experienced, which pays an average of 0.5 bitcoin per block, would instead be paying 10 bitcoin per block, on track to replace the mining reward on schedule. Bitcoin would be used for transferring currency between individuals in exchange for goods and services, instead of for frivolous applications.

Instead we have this thread.

The solution is to pay more for your transactions instead of demanding more for less. The current block size and new higher fee prioritization code allows us to crowd out the spammy with only nominal fees, even though it is still not necessary to include more than the default fee for next-block service. Economics will regulate the applications of Bitcoin to those uses that are worth paying a reasonable fee for reasonably fast processing. Unfortunately version 0.3.23 broke proper economics.

[michaelmclees]

SatoshiDice does not follow the rules:
The blockchain is a system for transferring value, of which the final total is specified in advance. Those are the terms of the social contract every Bitcoin holder has adopted understanding. Those are the terms every node has agreed to voluntarily participate in the network.
Nodes and miners have not unanimously agreed to have their resources/time spent inefficently processing informational messages like "you lose", "you win", or even "I bet on <this> game with <this> much". This was never part of the agreement.
Nor is the system supposed to hold up to flooding. If you go back to even the original paper by Satoshi, miners are expected to filter out flooding attacks like this. The proposed transaction fee solution works in most cases, but not SatoshiDice because they have social-engineered gamblers into covering the fees for them, and to make it worse the gamblers are willing to pay a higher fee than real users. If Bitcoin had achieved critical mass already, we might have been able to just say "too bad, deal with higher fees", but at this pre-adoption stage the response to that would almost certainly be "screw you, I'll stick with VISA".

Couldn't disagree more.  There is no social contract with Bitcoin, and to the extent any contract at all exists, Satoshidice follows it.  That nodes and miners have agreed to process SD transactions is self evident, despite your protests and claims to the contrary; unanimity was never a requirement.

[Luke-Jr]

If the Devs really think SD is a problem, they haven't seen anything yet. Bitcoin can't handle more than 1000 transactions a second? There is no way a Bitcoin will have value in 20 years!

Handling 1000 transactions per second for 10 active users (SatoshiDice) and handling 1000 tx/sec for 100000 active users are two totally different things.
The latter grows the infrastructure, the former overloads it.

Filtering out satoshidice transactions would make it trivial to double spend a losing bet.

If it takes double-spending to stop SD's abuse, then it's good that it's easier to do.
If SD is going to take the "tough, we don't care about the problems we cause" road while they abuse the network, I don't see one reason why the network should give a care if miners exercising their by-design choices makes SD more vulnerable because they don't even follow common best practices in accepting transactions.


While I agree that eventually the block size limit may need to be raised somehow, that day is far far in the future. With miners doing their job filtering out flooding attacks (the only major one currently being SatoshiDice), we are nowhere near even the soft limit being a concern.

Bitcoin's scaling problems are mostly limited to using the blockchain. There are many ways to avoid using the blockchain. Already, the vast majority of Bitcoin transactions (yes, even more than the SD flood!) occur within MtGox's system never touching the blockchain! The new payment protocol should help with some use cases as well. There are various possibilities for transparent trust-chain type transactions as well.

But all these different improvements require time to develop, understand, and implement in clients. With the current situation of active developers, it will probably take years before Bitcoin can scale nearly as well as competitors. Bitcoin Foundation is helping improve this situation by paying at least Gavin to work on things full time. Real adoption among rational people (ie, not gamblers or druggies) also brings with it an equivalent percentage of potential open source volunteer developers to join in the efforts.

SatoshiDice flooding the network does not. Anarchist nuts daring the government(s) to ban Bitcoin does not. These are counter-productive, and only harm the probability that Bitcoin will be able to achieve the adoption it needs to get to the point that it's truly viable.

[VinceSamios]

The reduction of Satoshi's 0.01 minimum fee to 0.0005 was an error.

The reduction was too great, but a reduction was necessary. It needs to be somewhat proportional to fiat currency exchange rates otherwise bitcoin doesn't do what it says on the tin (low transaction fees)

Maybe the solution is in more blocks with lower reward (ie. 5x more blocks, with 5btc reward each)

Either way, if bitcoin can never handle 5000+ transactions per second, why are we even bothering?

[2112]

While there is a value attached to the latter two, it is primarily a message. Otherwise, a gamer would just transfer a deposit, play, and withdraw (as I notice your site does) - no message passing involved.

For an easy analogy, this would be like WalMart charging your credit card for every item you pick up off the shelf, and refunding you if you put it back (actually worse, since SD uses 2 transactions for every action).
Not even VISA/MC could handle that kind of abuse, and their system (being centralised) is far more efficient than Bitcoin.

Luke-Jr is again posting about something that he has not even basic understanding: financial networks. This by itself isn't new.

But I think it is worthwhile to show that the classic credit card are using two messages per transaction: authorization and capture.

http://www.authorize.net/support/merchant/Submitting_Transactions/Credit_Card_Transaction_Types.htm

Typical self-serve fuel pump would use two transactions: the authorization to unlock the dispenser and capture one the dispenser is put back in the locked position. Physical store checkout stand transactions typically roll those two phases into a single compressed form.

Directly the above information has no bearing to Bitcoin. But the "payment protocol" is an area of the active development in Bitcoin. It would be great that more people understood how the typical payments work and think on how to translate them to the Bitcoin global broadcast network.

One thing is to prevent double-spends. But there is additional value to be gained from discovering who even attempted to authorize more spending that they really had available funds.

[conv3rsion]

No one is going to use Bitcoin, even for high value transactions, if they have to

1) Pay a fee to have their local currency converted to bitcoins
2) Pay a large transaction fee
3) Cover the fee of the recipient converting bitcoins back to their local currency

These steps will be necessary if bitcoins are expensive to spend. And bitcoins will be expensive to spend if the number of transactions is artificially limited.

Large transaction fees makes Bitcoin uncompetitive and it makes it less useful. If you have to exchange bitcoins back to cash, to spend them on ordinary purchases, why bother at all?

This is technology, if it can't scale, it will be replaced by something that can. The people investing in bitcoins are doing it because they believe it can be digital cash. 7 transactions per second is not digital cash. Its not digital gold either, gold does not cost large amounts of money to trade.

[SgtSpike]

The solution is to pay more for your transactions instead of demanding more for less.

Exactly this.

For everyone sending transactions, start putting fees in them HIGHER than whatever SatoshiDice is paying.  This would relegate SD transactions to be the least-prioritized transactions on the network, and they would only fill up the remainder of blocks after all of the more "legitimate" transactions have been processed

That said, we will eventually need to be increasing block sizes, so why not start now?  I completely agree that the network needs to be able to handle more transactions to go "mainstream", and I think we should begin planning based on what current hardware can handle, not on an arbitrary limit that we think will be enough.

Currently, the network at 1 MB per block can create about 52 GB of blockchain data in a year.  I'm not sure about the rest of you, but that amount is certainly feasible for me to store indefinitely.  A 2 TB drive can be had for $99.  That'll store 19 years of data, so less than $6/year to store the blockchain.  Is that really so unreasonable?

So say we increase the maximum block size to 5 MB per block.  That would create up to 260GB of blockchain data in a year.  Again, a 2 TB drive would store 7 years of data for $99.  So that's what, $12 or $13 a year?

Now certainly, there is no monetary compensation or incentive for people to choose to store the whole blockchain, and I don't expect many people to do so regardless of what block size is ultimately chosen.  But those who are interested in maintaining Bitcoin's integrity as a decentralized currency certainly will, and will definitely be willing to spend a token amount ($12-$13 a year) to maintain their Bitcoins' value.

[conv3rsion]

Do people trading Gold need more than 7 tx's per second?

(i.e. do you think Bitcoin would really *die* if that was the limit?)

1) For all the gold in the world, traded amongst all the people in the world? Yes
2) It will die because it will be replaced by something without a silly limit. All it takes is that people start doubting the technology, and opening the door to a competitor that is obviously better.

[CIYAM]

This is technology, if it can't scale, it will be replaced by something that can. The people investing in bitcoins are doing it because they believe it can be digital cash. 7 transactions per second is not digital cash. Its not digital gold either, gold does not cost large amounts of money to trade.

So you are saying that Gold tx's are > 7 per second (just trying to work out what the *real* problem is)?

[matakaonew]

We need a direct proportion between the number of pending transaction in the memory and the limit size in real time.

someone's with me on this?

when a block is found, confirmation take in account the pending network memory size peak since the last block found

then, miner will have son incentive to add low fee transaction because they can always add a quite good proportion of all the pending transactions?

[tigereye]

SatoshiDice does not follow the rules:
The blockchain is a system for transferring value, of which the final total is specified in advance. Those are the terms of the social contract every Bitcoin holder has adopted understanding. Those are the terms every node has agreed to voluntarily participate in the network.
Nodes and miners have not unanimously agreed to have their resources/time spent inefficently processing informational messages like "you lose", "you win", or even "I bet on <this> game with <this> much". This was never part of the agreement.

My cognitive dissonance alarm is ringing.

On the one hand you're against people including 'informational messages' in the blockchain, even if actual value is transferred...
On the other hand your mining pool has embedded prayers and scripture into the blockchain.

Perhaps you've recently changed your opinion on blockchain bloat?

Regardless, I think S.Dice performs a few services to Bitcoin as a whole and is a good thing:

• It stress tests the Bitcoin network. Without it we wouldn't truly know how the network would handle transaction volumes that we see today as it accounts for a large proportion of global volume.
• It provides an incentive to use Bitcoin. While many are of the opinion that gambling is wrong, far more people around the globe enjoy it. S.Dice provides a simple way to gamble and has introduced Bitcoin to new users as a result; people can't gamble online as easily with cash.
• It lets us anticipate future requirements for Bitcoin sooner, as Mike has pointed out with respect to the soft block limit. This is like a small alarm: we're 1/4 of the way to a breaking point so let's start thinking about the best way to solve this problem now.

Yes, S.Dice produces a large volume of transactions, but S.Dice is NOT an attack of the network. Every transaction into S.Dice is a transfer of legitimate value, and every response is another transfer of value. An attack would transfer NO value, or such negligible value that it is worthless.
Refusing to process these transfers in value is similar to a net-neutrality issue: it's a "currency-neutrality" issue.

Bitcoin was developed to prevent any party from declaring who can and cannot participate in a financial network. Blacklisting a set of addresses from having their transactions included in the blockchain seems like a step backwards and is the antithesis of Bitcoin's raison d'etre.

[VinceSamios]

Let's just clear something up...

Bitcoin isn't gold - it's not intended to replace gold.

Gold is a store of value more than it is a currency. Bitcoin is for transactions great and small, local and international.

[CIYAM]

Let's just clear something up...

Bitcoin isn't gold - it's not intended to replace gold.

Gold is a store of value more than it is a currency. Bitcoin is for transactions great and small, local and international.

Well thanks for being the "spokesperson" for everyone here but I think you'll find that quite a few people disagree and if Satoshi really had planned for Bitcoin to be a tx system to compete with the likes of Paypal/Visa then you don't think he might have made a mistake or two (if not then why does this very thread exist)?

[2112]

The reduction of Satoshi's 0.01 minimum fee to 0.0005 was an error. A divine design was altered by whims and perceived exponential growth of Bitcoin value, without considering future impact on the network. Whims like those seen all over this forum in the past few weeks.

OK, the phrase "divine design" is just so funny that I had to quote it for the future reference.

[Prattler]

Handling 1000 transactions per second for 10 active users (SatoshiDice) and handling 1000 tx/sec for 100000 active users are two totally different things.
The latter grows the infrastructure, the former overloads it.

Thanks Luke-Jr for taking the time to explain it to people. Bitcoin can scale up, but it's quite expensive! Expensive as in not just hardware and bandwidth, but also network decentralization and availability to enthusiasts.

Let's say you're a bitcoin enthusiast and you want to run a full node. Will you spend $1,000 just to service Satoshi Dice? No way! Will you spend $10,000 to be part of a world changing global money system? HELL YEAH!

Bitcoin will scale up, but it would be best if it kept small until there is actual user demand who want to transfer value. Sathosi Dice are mostly bots and they mostly transfer information, not value.

[muyuu]

I'm convinced, Luke. But then again there's nothing I should do since I already mine in Eligius.

[Gavin Andresen]

You may have heard me say "Bitcoin is an experiment" before...  well, we're finding out right now what happens as the experiment scales up.

First:  I sent a message to the big mining pools, reminding them of the run-time options they can set to control the size of the blocks they create. I did not tell them what they should or shouldn't do, I think we need to move beyond centralized decision-making.

I did send them a pointer to this very rough back-of-the-envelope estimate on the current marginal cost of transactions:
  https://gist.github.com/gavinandresen/5044482

(if anybody wants to do a better analysis, I'd love to read it).

Second: block size is half of the equation. The other half is transaction fees and competition for getting included into blocks. All of the bitcoin clients need to do a better job of figuring out the 'right' transaction fee, and services that generate transactions will have to adjust the fees they pay (and are, already).

Finally: in my opinion, there is rough consensus that the 1MB block size limit WILL be raised. It is just a question of when and how much / how quickly.

[Raoul Duke]

Filtering out satoshidice transactions would make it trivial to double spend a losing bet.  Therefore I think it would be a bad idea for mining pool operators to make satoshidice transactions low priority or reject them alltogether.
If you make a bet on satoshidice, you will usually know if it lost before getting any confirmations.  If miners prioritized non-satoshidice transactions, then all you need to do to cancel your losing bet is double spend the coins with a high transaction fee.

More info is here: https://bitcointalk.org/index.php?topic=130764.0

Rejecting SD transactions is NOT a solution.

I disagree. That's exactly the solution. If SD starts having losses because people double-spend all the losses then I guess they'll have to change the way the game is played, won't they?

[Nagato]

Firstly, for all those people crying out the end of Bitcoin if the block size is not lifted to 1GB, do yourselves a favor and go read the blocksize thread. There are many many issues you have no clue of which have been raised in the thread by people who have been thinking about this issue far longer than you know of Bitcoin.

Regarding Luke's view on SD, while i personally do not agree with his view that SD MUST not exist in it's current form, it is entirely upto him what txns his pool includes or excludes. If you don't agree with him, start your own pool or join one which has policies which you agree with. This is called freedom.
I agree that SD is extremely wasteful in it's current form, but the ideal way to fix that must come from the market, when people are willing to pay more than SD in fees to ensure their "useful" txns are processed efficiently. Or a SD competitor to offer better odds by using a deposit system to cut down on fees. The market will eventually force SD to change or go out of business.

Mike -  Ive been reading up on Assurance Contracts, have some questions.

5 other nodes indicate their willingness to participate, states how much they'd be willing to contribute, and each one also includes a fresh public key.

1) My question is why will nodes contribute on behalf of everyone(including wasteful nodes)? Or is there a scheme where the payee can filter which txns are subsidised?
2) If it is indeed meant for everyone's benefit,
a) How do you prevent waste by spammers or attackers?
b) Whats to prevent the cultivation of even more wasteful txns(sending msgs over blockchain, storing ascii art in scripts, etc..)
c) How is it sustainable?
I can understand for certain Kickstarter projects, its a 1 time cost. But incentivising miners will be a permanent requirement.
Even if there are big Bitcoin businesses which benefit from sustaining the network, how do we know their contribution will be enough?
Why not let my competitor foot the bill instead while i use the money saved to expand my business?
It just does not make economic sense to me.

I could see NAC subsidising and reducing network fees, but im quite certain the network will fall apart if NACs are going to be the sole source of funding for miners.
This is akin to the Fed bailing out banks for the "stability" of the global financial system. What happens instead is that you encourage banks to lever up even more since they know they are backstopped. Without personal cost/risk, there is no reason for anyone to optimise or reduce waste. If the world could function on the charity of a few, nobody would work.

Having said that, maybe im wrong. If you feel strongly that this will work, please implement it and prove me wrong so that we can all have free Bitcoin txns.

[muyuu]

You may have heard me say "Bitcoin is an experiment" before...  well, we're finding out right now what happens as the experiment scales up.

First:  I sent a message to the big mining pools, reminding them of the run-time options they can set to control the size of the blocks they create. I did not tell them what they should or shouldn't do, I think we need to move beyond centralized decision-making.

I did send them a pointer to this very rough back-of-the-envelope estimate on the current marginal cost of transactions:
  https://gist.github.com/gavinandresen/5044482

(if anybody wants to do a better analysis, I'd love to read it).

Second: block size is half of the equation. The other half is transaction fees and competition for getting included into blocks. All of the bitcoin clients need to do a better job of figuring out the 'right' transaction fee, and services that generate transactions will have to adjust the fees they pay (and are, already).

Finally: in my opinion, there is rough consensus that the 1MB block size limit WILL be raised. It is just a question of when and how much / how quickly.

IMO you should have included Luke's patch and its justification so they can balance their decision.

They are the miners, they should vote on that as well.

[Mike Hearn]

Well thanks for being the "spokesperson" for everyone here but I think you'll find that quite a few people disagree and if Satoshi really had planned for Bitcoin to be a tx system to compete with the likes of Paypal/Visa then you don't think he might have made a mistake or two (if not then why does this very thread exist)?

Ian, Satoshi did plan for Bitcoin to compete with PayPal/Visa in traffic volumes. The block size limit was a quick safety hack that was always meant to be removed.

In fact, in the very first email he sent me back in April 2009, he said this:

Hi Mike,

I'm glad to answer any questions you have.  If I get time, I ought to write a FAQ to supplement the paper.

There is only one global chain.

The existing Visa credit card network processes about 15 million Internet purchases per day worldwide.  Bitcoin can already scale much larger than that with existing hardware for a fraction of the cost.  It never really hits a scale ceiling.  If you're interested, I can go over the ways it would cope with extreme size.

By Moore's Law, we can expect hardware speed to be 10 times faster in 5 years and 100 times faster in 10.  Even if Bitcoin grows at crazy adoption rates, I think computer speeds will stay ahead of the number of transactions.

I don't anticipate that fees will be needed anytime soon, but if it becomes too burdensome to run a node, it is possible to run a node that only processes transactions that include a transaction fee.  The owner of the node would decide the minimum fee they'll accept.  Right now, such a node would get nothing, because nobody includes a fee, but if enough nodes did that, then users would get faster acceptance if they include a fee, or slower if they don't.  The fee the market would settle on should be minimal.  If a node requires a higher fee, that node would be passing up all transactions with lower fees.  It could do more volume and probably make more money by processing as many paying transactions as it can.  The transition is not controlled by some human in charge of the system though, just individuals reacting on their own to market forces.

Eventually, most nodes may be run by specialists with multiple GPU cards.  For now, it's nice that anyone with a PC can play without worrying about what video card they have, and hopefully it'll stay that way for a while.  More computers are shipping with fairly decent GPUs these days, so maybe later we'll transition to that.

Satoshi said back in 2010 that he intended larger block sizes to be phased in with some simple if (height > flag_day) type logic, theymos has linked to the thread before.

I think he would be really amazed at how much debate this thing has become. He never attributed much weight to it, it just didn't seem important to him. And yes, obviously, given the massive forum dramas that have resulted it'd have been nice if he had made the size limit floating from the start like he did with difficulty. However, he didn't and now we have to manage the transition.

1) My question is why will nodes contribute on behalf of everyone(including wasteful nodes)? Or is there a scheme where the payee can filter which txns are subsidised?

The "why" is the whole point of assurance contracts. They're a way to fund the creation of what economists call public goods, that is, goods which cost money to create but once created benefit everyone for free with no way to exclude people. The canonical example is a lighthouse.

Why will nodes contribute on the behalf of everyone? Firstly, it's not actually nodes, it's "receivers of funds", and it doesn't need to be all of them, just some. They will fund these contracts because they need network security and thus mining to take place. Yes, by doing so, they implicitly subsidize freeloaders who don't pay, however that's the reason for the design of an assurance contract - it means others have to chip in, otherwise nobody pays anything.

Even if there are big Bitcoin businesses which benefit from sustaining the network, how do we know their contribution will be enough?

The system naturally converges upon an equilibrium in which the only businesses that use Bitcoin are the ones who can tolerate the delay/double-spend-frequency tradeoff. If other businesses want more hashing in less time, they can join the contracts and result in more fees. So "enough" is a relative term. It will always be "enough" for the current set of users, and for other sets the equilibrium hash rate may be more or less than what they need.

Bear in mind that if everyone thinks "I won't pay for hashing because my competitors will" then the contract does not complete and nobody pays anything, therefore nobody gets any security. That's the purpose of an assurance contract - I pay only if my competitors also pay.

W.R.T "waste" - you have to distinguish between the cost of mining and the cost of validation. The two are not connected except that the cost of mining is always more than the cost of validation, because mining requires validation. I believe validation will be, even at high transaction rates, cheap enough that people can just swallow them as a cost of business or even just for hobbyist reasons. Alternatively, people can once again band together and form assurance contracts to fund the running of full nodes.

Having said that, maybe im wrong. If you feel strongly that this will work, please implement it and prove me wrong so that we can all have free Bitcoin txns.

Unfortunately I can't do that today. The present situation is that hash speeds are so great thanks to inflation that nobody is successfully double spending via forced re-orgs (the attack that lots of mining prevents). So there's no incentive for anyone to fund mining via fees, the only reason anyone is attaching fees at all right now is to try and win the block space auction or avoid DoS checks. Currently inflation is "good enough" and this has, in fact, always been the case.

One of the curious things about this whole argument is nobody knows the future well enough to implement solutions today. For all we know it can be the year 2050 and a single Bitcoin is worth so much that inflation is still driving hash speeds sky high. There may never even need to be incentivization via fees within our lifetimes. Or maybe there will. If there is, then if I'm still around I'll sit down and write the code.

[os2sam]

Firstly, for all those people crying out the end of Bitcoin if the block size is not lifted to 1GB, do yourselves a favor and go read the blocksize thread.

There's a Block Size thread?  I guess that is what I've been looking for since this ruckus started a couple days ago.

Where is it?
Thanks,
Sam

[evoorhees]

I lost a lot of money today because of this shit. And I don't care for satoshi dice. Let them move to litecoin or ban them from spamming the network and my harddrives.

If bitcoin miners can't handle one high frequency gambling game, bitcoin is totally fucked.

And you can thank Luke-Jr for turning the issue into a personal vendetta against SatoshiDice.

And for the record, Luke-Jr has every right to not include SD transactions, if he wishes. That's his choice, as a free individual using this technology. I don't fault people for using Bitcoin in whatever way they choose.

[OneMINER]

I'll be blunt and say that I think many posters here don't fully understand the functions of a miner in the bitcoin world.

Not only are miners the armored trucks and tellers of bitcoin, securely transferring value and saying if a transaction is legit or not. But they are also the keepers of the chain. Gardeners weeding out undesirable elements. This is by design, it's a feature of the bitcoin protocol.

The blockchain isn't designed to accept unlimited amounts of abuse. Imagine blocks with unlimited size, you could fill them up with enough spam that no normal users could validate them, breaking bitcoin. If the blocksize is severely limited then bitcoin becomes illiquid, looses value and functionality. So there's disaster on ether side. Miners are the answer and always have been.

There's some elements of democracy to bitcoin. The choice of what clients to use is one. You could hardfork and have your own chain, adopt whatever features you'd like, work within the current chain, ect. Mining is another example of this. By each individual miner saying what he or she will allow into the chain and at what rate, we shape the traffic of bitcoin. It's not a disgrace, it's part of the normal function of the system. For example if half of all miners (controlling half of all hashpower) decide that SatoshiDice transactions are unacceptable then, on average, SD transactions will take twice as long to get a confirm. They have not been banned, people have voted on what will or will not go into the final product.

Morally I find that this solution is just and I think that ultimately it's the answer. I think that the current pool system is a security vulnerability and it reduces the choice (vote) of the individual miner. Mining should be full of choices and decentralized. Inexpensive hardware and software that is p2p is needed for this. We have P2Pool which is an excellent alternative to the centralized pools, Luke-Jr also has an alternative to centralized mining. Right now ASICs are the only mining hardware that's worth it but they are very expensive. I think that in the future though, prices on efficient and fast mining hardware will come down a great deal.

To sum it up, a laissez-faire standard for what goes into the blockchain is what's broken. If you think about it for a second, bitcoin can be permanently harmed by just spamming it with garbage, weeds overgrowing the path obscuring the true beauty of the system (laying it on thick now). It's not the duty of all future users to just take whatever from an unmetered sewage outlet. It's our duty as current users to be thoughtful and respectful of those who will come after us. Miners ARE the stewards of the blockchain and to say different is totally false.

[conv3rsion]

You may have heard me say "Bitcoin is an experiment" before...  well, we're finding out right now what happens as the experiment scales up.

First:  I sent a message to the big mining pools, reminding them of the run-time options they can set to control the size of the blocks they create. I did not tell them what they should or shouldn't do, I think we need to move beyond centralized decision-making.

I did send them a pointer to this very rough back-of-the-envelope estimate on the current marginal cost of transactions:
  https://gist.github.com/gavinandresen/5044482

(if anybody wants to do a better analysis, I'd love to read it).

Second: block size is half of the equation. The other half is transaction fees and competition for getting included into blocks. All of the bitcoin clients need to do a better job of figuring out the 'right' transaction fee, and services that generate transactions will have to adjust the fees they pay (and are, already).

Finally: in my opinion, there is rough consensus that the 1MB block size limit WILL be raised. It is just a question of when and how much / how quickly.

Thank you Gavin, this is exactly what people need to hear.

[Blowfeld]

Where to begin???  Yes, I'm new to this forum.  But, I have been observing Bitcoin as an outsider for quite a while.

By and large, I agree with LukeJr.  SD is spam.  Imagine a real-world Las Vegas style casino sending a transaction to every other casino around the world (and perhaps to every gambler (and perhaps to every person with money in their pocket)) every time a customer pulls the handle on a slot machine.  The SD model is insane and completely unsustainable.

Those who equate Bitcoin with Gold are also rather extremists.  Perhaps in the old west you could buy a whiskey for some gold dust.  But I've never bought a latte with a shaving off a gold coin.

Those who demand higher fees are ignoring the reality.  As it stands now, those who operate full nodes bear the burden of the SD-like spam.  Yet, there is no fee or reward paid to run such a node.  [Back when bitcoin started, any full node who wanted compensation was occasionally rewarded by solving a block.  Now that is infeasible.]  If things aren't changed, the only people who will run full nodes are the mega-miners.  And consolidated centralized control is only a few mergers away.

As has been discussed elsewhere, the receiver of funds (not the sender) should specify the level of certainty they want in assuring their received funds are valid.

Clearly a 1 Satoshi speck of dust doesn't require the level of confirmation as a 10,000 BTC transaction.  Without a change to the protocol, there is no distinction.  But all such protocol changes I've seen discussed have flaws.  Some research effort should be extended to figure this out.  Meanwhile...

In block 224588, someone paid a 94 BTC fee.  I presume this was a mistake.  On the other hand, as I suggested in another thread, perhaps this is intended as a means of laundering tainted money into clean money.  If I had the resources to operate a mining pool, I think I would *only* include transactions with *no fee*.  [How else do you guarantee you are receiving non-stolen money in your block reward?]  [How else do you avoid the moral conundrum and substantial effort of "returning" the (obviously erroneous) transaction fee of US$4000 to the rightful party?]

In my view, the only realistic long-term solution is one that eliminates centralized control of mining pools. 

Changing the hash algorithm every 6 months would tend to thwart those (governments, large corporations, or large syndicates) who can afford to invest in ASIC technology.  Software that can adapt (almost) instantly (to a change of the constant used in Round 37 of the SHA1 algorithm, for example), puts the mining back in the hands of the regular people who operate the nodes and suffer the burden of ever-increasing block-chain bloat.  With 10,000 people deciding what they will include or exclude from their mined blocks, Bitcoin might again become a decentralized currency.

Furthermore, if it is in the *system's* best interest to pass transactions, even as their number and size increases, then the inherent reward created by generating a block should be *increasing*, not decreasing by half every four years.

[skibum]

Sounds like the beginning of the end.

[Peter Todd]

Finally: in my opinion, there is rough consensus that the 1MB block size limit WILL be raised. It is just a question of when and how much / how quickly.

To say there is a rough consensus that the 1MB block limit will be raised at some unspecified time in the future is missing the point. The real issue is, is there a consensus that a large fraction of the transaction volume will in the future happen off-chain? Given the range of opinions between you and Mike, who expect transaction fees to stay low enough for all but microtransactions, Pieter Wuille, who if I am correct is unsure, and Jeff Garzik, and Gregory Maxwell, who are both working on designs for off-chain transaction systems, I just don't see a consensus.

After all, for the user, the limit itself isn't the issue, the issue is how they will be expected to store and spend their Bitcoins, and what kind of security Bitcoin will provide them. I haven't seen anything from you or Mike actually talking concretely about what kind of protection from authorities and others trying to control Bitcoin that you expect Bitcoin to be able to provide. For instance, in the future, do you expect that by paying a sufficiently high fee can I expect get my transaction confirmed eventually, regardless of who I am or what the transaction is for? Do you expect me to be able to vote on what transactions do get confirmed and included in blocks, in proportion to the hashing power I possess? Do you expect me to be above to participate in Bitcoin by creating transactions and mining as a full validating node anonymously?

Satoshi said back in 2010 that he intended larger block sizes to be phased in with some simple if (height > flag_day) type logic, theymos has linked to the thread before.

I think he would be really amazed at how much debate this thing has become. He never attributed much weight to it, it just didn't seem important to him. And yes, obviously, given the massive forum dramas that have resulted it'd have been nice if he had made the size limit floating from the start like he did with difficulty. However, he didn't and now we have to manage the transition.

You know, I didn't think anything at first of the Wiki page on scaling advocating simply increasing the block size as required, even to the point of requiring full nodes to have tens of thousands of dollars worth of high speed internet connections and UTXO storage hardware. But eventually I started thinking about the implications - the turning point for me was really when I realized how large miners could use large blocks as a way to force smaller miners out of business.

Satoshi didn't foresee pool mining, the dangers of bloating the UTXO set, or even that multiple clients would be used. Bitcoin was a brilliant idea, don't get me wrong, but Satoshi was a person, not some all knowing all seeing deity. It doesn't surprise me the slightest that he might not have thought through all the implications of allowing the block size to increase without bound, just like he left Bitcoin with a scripting system that turns out to not have that many actual applications.

The massive forum dramas ultimately come down to the fact that regardless of whether the block size is left as it is, or increased, Bitcoin as we know it will change; there just isn't consensus on how it will change. You come from Google, a place of massive centralized server farms controlled by one company. Google's services work pretty well - centralization can have benefits - but many of us feel that goes down a very dangerous path. It's easy to see how a world where blocks are sufficiently large that only well funded pools with highly visible high-speed internet connections can lead to government and large businesses controlling Bitcoin. Fundamentally, distributing large amounts of data in a censorship resistant way is far harder than distributing small amounts of data.

[commonancestor]

We are already bumping up against a limit. No simulation needed. We have reality instead ...

OK, wrong word. Still I hope that most pools will not immediately lift / increase their limit. So we know what will happen when we reach the hard limit, which can't be changed so easily.

So let us bump against this for a few month. And lift it only if it really damages Bitcoin.

Yes, this is the right approach. Solve the problem now soft way, rather than later hard way.

I think the solution should be increasing both tx fees and max block size. The network should not discriminate against users based on who they are (e.g. SatoshiDice). If it's possible to flood the network with cheap transactions then the fees are simply too low and should be increased. Also miners should be less dependent on generating coins and more on receiving fees. When the fee is "about right" and blocks are getting full then increase max block size. It should be such so that average Joe can still run his full node or a miner.

[lucif]

Where is the foundation during the only moment we need it?

They jerk on mtgoxlive



I don't know what sort of organization is it. Just a bunch of nerds collecting fees to join other for jerking on price.

[VinceSamios]

This thread is very interesting in that it is a place where some of the smartest people on the plant, discuss things with some of the stupidest.

I love bitcoin.

[jade087]

Increasing the block size is a temporary fix. Everyone involved should be fully aware that if you want your transaction to be processed quickly, you should include a transaction fee. Bitcoin shouldn't be the network for unlimited free transactions that millions of clients verify for you.

I don't consider SD a DDoS, but I do consider the people that use it as spammers. AFAIK SD returns winnings with an appropriate tx fee; you should be including the same in your bets.

That said I wouldn't be surprised if the block size will be increased eventually. It shouldn't be taken lightly. It should be conservative. It should not be algorithmic. But increasing the block size isn't going to solve the problem of a busy network which people are trying to use for free (c.f. building more roads invariably increases traffic).

Edit: Remember that everybody needs to have the ability to run their own complete node with the complete blockchain. This is crucial and fundamental to the security of the network.

[SgtSpike]

This thread is very interesting in that it is a place where some of the smartest people on the plant, discuss things with some of the stupidest.

I love bitcoin.

Indeed... fascinating to watch the interaction.

[Anon136]

it only means that we will inevitably need to embrace multiple blockchains. They could be clones of bitcoin or they could be competing cryptocurrencies like litecoin. With a little luck cryptocurrency echanges will be decentralized censorship resistant and ubiquitous in the future. If this is the case than this will make the whole problem a non problem. I dont think this means is that bitcoin will be worth nothing some day, what i do think this means is that bitcoin as we know it has a soft cap on its value. Probably this cap is much higher than 43 dollars or w/e bitcoin is valued at right now.

Multiple blockchains sounds like a mess, considering people are putting their faith into these currencies and a lot of their value comes from scarcity, i'm not sure there is going to be a future with a lot of alt-chains with similar prices. I imagine 1 chain/system will emerge and it will be the one that really solves the block size issue.

Also the only reason Bitcoins are worth $1 - $100 or even more is because many people think that Bitcoin has no transaction cap at all. People think this is the future and the future does not cap out at 7 transactions a second.

also this totally possible. supposing it can really be solved than that cryptocurrency will probably surpass bitcoin and be the final one to rule them all. Still when ever that currency arrives if it does arrive bitcoin will be the way to get into and out of it early on, so ill be ready with my bitcoins. And if it doesnt arrive and this problem really cant be "solved", than my proposal will be good enough to get the job done.

[mintymark]

Increasing the block size is a temporary fix. Everyone involved should be fully aware that if you want your transaction to be processed quickly, you should include a transaction fee. Bitcoin shouldn't be the network for unlimited free transactions that millions of clients verify for you.

The probalem is not about speed, as I understand it. Time was, back in the day when no fee meant that transactions could take a while to confirm, - I once had one take 24 hours, but confirm it did.

The problem is this: transactions with insufficient fee can easily end up effectively lost to sender and receiver, gone, poof.  A skilled operative may be able to retrieve them in some situations, but most people no. People have already lost money in this way.

This is not a characteristic anyone wants Bitcoin to have. Whatever change we make, it should result in a range of transactions speeds I think, so that no transaction fee or small fee can result in very slow transactions, but never loss, and a high fee guarantees inclusion in the next block, as it pretty much does now.

[chmod755]

Note this isn't really a problem if miners are responsible and filter out the SatoshiDice flooding.
My git repository contains a "block_dice" branch to do just that.

I didn't read the code, but I hope it prevents blockchain spam in general and not just satoshiDice (1dice... addresses). Does it?

[K1773R]

Note this isn't really a problem if miners are responsible and filter out the SatoshiDice flooding.
My git repository contains a "block_dice" branch to do just that.

I didn't read the code, but I hope it prevents blockchain spam in general and not just satoshiDice (1dice... addresses). Does it?

only SD, or fake SD adresses

[Blowfeld]

Changing the hash algorithm every 6 months would tend to thwart those (governments, large corporations, or large syndicates) who can afford to invest in ASIC technology.  Software that can adapt (almost) instantly (to a change of the constant used in Round 37 of the SHA1 algorithm, for example), puts the mining back in the hands of the regular people who operate the nodes...

You would have been a load of fun after the invention of the Gutenberg printing press:

Changing the fontsize every few days would tend to thwart those who can afford to invest in Gutenberg printing technology.  Scribes who can adapt (almost) instantly (to a change of the lettering size, for example), puts publishing back in the hands of the regular people who operate the quills...

Do you disagree with the goal of reducing the ability of a large entity from controlling Bitcoin.  Or do you disagree with my (admittedly novel) approach?

[eleuthria]

Pushed an update to all of BTC Guild's stratum nodes this morning.  The nodes are now running essentially double default values:

500kb max size.  50kb set aside for low-fee/high-priority.  50kb minimum size so other transactions will get in if there aren't that many waiting for confirmations.  Already seeing a reasonable reduction in unconfirmed transactions as more blocks get pushed out with 2x the defaults.

[Daily Anarchist]

I can't wrap my head around why so many people are hating on Satoshi Dice.

What if there were some African business helping to educate or feed starving kids in Africa and it had a business model that produced a huge quantity of transactions, would you still be against it?

I really think these anti-Satoshi Dice people are elitists who think that because gambling is stupid in their minds that nobody should be able to.

As if the Bitcoin Protocol gives a shit about what the transactions are used for.

And Luke-Jr says SD is breaking the rules. Really? I was under the impression that any transactions that broke the rules were immediately rejected by the bitcoin protocol. I mean, it looks like they're playing by the rules to me.

Seriously, if Bitcoin can't handle Satoshi Dice just throw in the towel right now, because I have some news for you. In the future, when Bitcoin is the GLOBAL MONETARY STANDARD, 95% of all transactions are likely to be gambling, sex, and drug related.

Those seem to be things that people value highly in life. Just because your puritan asses can't handle it doesn't mean we can't.

I, for one, LOVE that Satoshi Dice is flooding the blockchain.

[SgtSpike]

I can't wrap my head around why so many people are hating on Satoshi Dice.

What if there were some African business helping to educate or feed starving kids in Africa and it had a business model that produced a huge quantity of transactions, would you still be against it?

I really think these anti-Satoshi Dice people are elitists who think that because gambling is stupid in their minds that nobody should be able to.

As if the Bitcoin Protocol gives a shit about what the transactions are used for.

And Luke-Jr says SD is breaking the rules. Really? I was under the impression that any transactions that broke the rules were immediately rejected by the bitcoin protocol. I mean, it looks like they're playing by the rules to me.

Seriously, if Bitcoin can't handle Satoshi Dice just throw in the towel right now, because I have some news for you. In the future, when Bitcoin is the GLOBAL MONETARY STANDARD, 95% of all transactions are likely to be gambling, sex, and drug related.

Those seem to be things that people value highly in life. Just because your puritan asses can't handle it doesn't mean we can't.

I, for one, LOVE that Satoshi Dice is flooding the blockchain.

A big thumbs-up to this post!

[eleuthria]

And don't forget: Satoshi Dice has probably paid more in transaction fees than the entire network combined throughout history (not counting mistakes and/or testing transactions).

Dice payouts include fees, as do most of the bets that go there in the first place.

[Gabit]

I'm sorry to say this, but this debate is moronic. Mining needs to be profitable to groups of people. It is a natural evolution. Everything, and I mean EVERYTHING has gone so, let it be bumping oil, or mining gold. When competition gets hard, it is natural that people group and act together for mutual goal. This means that everyone cuts of fat and aims for the best result available TOGETHER (read: company). Let it be in this case, network speed or processing power, or in gold mining business, the best machinery and the chemicals. The competition it self brings stabilization. And the real value of BTC, is not that some one holds it, It is that it cannot be generated from nothing. One can only spend it once. Centralization of Hashpower is not issue at all, it only drives more competition = security for the network.

If we cannot handle SD, we can't handle shit. 68 trillion is the world GDP, there will be SD^SD of "dust", when BTC makes it. If it cannot handle this, this wasn't suppose to handle anything.

The most efficient wins.

[johnyj]

This topic always as hot as fire  

The scalability strategy should be distributed, not centralized, to centralize all the transaction in a single network is the sure step towards centralization

Bitcoin network is not designed to be a trading platform, high-frequency trading should be handled by brokers with dedicated data center, outside of block chain. If VISA network were used to handle stock trading, they will crash immediately (Nasdaq can do 1 million tx/s while VISA barely can 10k tx/s)

And bitcoin should not become a duplication of existing services like paypal or VISA , let them handle the daily transctions, and let bitcoin handle the more important low frequency transaction, like salary/saving and pension

[OneMINER]

Last few posts (excluding the one right before this one) show an epic misunderstanding of what's going on. Bitcoin isn't broken, SD didn't break it. It's a sort of thorn in our sides. On the other hand, how can anybody be glad that the blockchain "is being flooded"? We live in a finite universe, you can't fit an infinite amount of anything in anything. The blockchain is no exception. The amount of fees that SD pays is besides the point. The question at hand is, of what value is all the data that's in the blockchain? We have to carry this with us, it makes sense to only take the essentials. If most of the data is noise then it impacts the useability of bitcoin. So for this reason I say that in the case of the blockchain there is such a thing as garbage, undesirable contents.

Look at my last post. I detail some facts about mining and miners. Miners DO have the power (and authority) to censor transactions. They can DEMAND that you pay a higher fee. This isn't a mistake, these are the brakes designed into the system for EXACTLY THIS PURPOSE. I contend that no system exists that can withstand an infinite amount of bad product, waste or whatever you'd like to call it. Further I expressly retain the right to kick this noise to the curb if I feel it will benefit the network.

Good day sirs!

[johnyj]

I had a feeling that many people's mindset are still stayed in the fiat currency world, which is a world with unlimited money supply and endless chasing of exponential growth

Why can't they think like Austrian economists?  It seems that FED's brainwash is quite effective  

Like the limitation in total amount of coins, let's make a schedule to increase the soft block size limit every 4 year by 256k, 128k, 64k, 32k etc... and see what that brings  

IMO this will make bitcoin concept more consistent: Limited supply and limited transaction capacity

[Daily Anarchist]

Last few posts (excluding the one right before this one) show an epic misunderstanding of what's going on. Bitcoin isn't broken, SD didn't break it. It's a sort of thorn in our sides. On the other hand, how can anybody be glad that the blockchain "is being flooded"? We live in a finite universe, you can't fit an infinite amount of anything in anything. The blockchain is no exception. The amount of fees that SD pays is besides the point. The question at hand is, of what value is all the data that's in the blockchain? We have to carry this with us, it makes sense to only take the essentials. If most of the data is noise then it impacts the useability of bitcoin. So for this reason I say that in the case of the blockchain there is such a thing as garbage, undesirable contents.

Look at my last post. I detail some facts about mining and miners. Miners DO have the power (and authority) to censor transactions. They can DEMAND that you pay a higher fee. This isn't a mistake, these are the brakes designed into the system for EXACTLY THIS PURPOSE. I contend that no system exists that can withstand an infinite amount of bad product, waste or whatever you'd like to call it. Further I expressly retain the right to kick this noise to the curb if I feel it will benefit the network.

Good day sirs!

I think the fact that Satoshi Dice is a gambling service is what's clouding your judgment.

Imagine if NOBODY knew what all of these transactions were being used for. Then what would people say? Would they still be complaining about too many transactions? At the end of the day that's what this is all about. How many transactions and how much space do we want to store on our hard drives?

Disk space is CHEAP, and getting CHEAPER, and there are ways to innovate storing and downloading the blockchain. The idea that bitcoin should be hardcapped at 7 transactions per second is so ludicrous I really can't believe people are defending it at all.

[SgtSpike]

Last few posts (excluding the one right before this one) show an epic misunderstanding of what's going on. Bitcoin isn't broken, SD didn't break it. It's a sort of thorn in our sides. On the other hand, how can anybody be glad that the blockchain "is being flooded"? We live in a finite universe, you can't fit an infinite amount of anything in anything. The blockchain is no exception. The amount of fees that SD pays is besides the point. The question at hand is, of what value is all the data that's in the blockchain? We have to carry this with us, it makes sense to only take the essentials. If most of the data is noise then it impacts the useability of bitcoin. So for this reason I say that in the case of the blockchain there is such a thing as garbage, undesirable contents.

Look at my last post. I detail some facts about mining and miners. Miners DO have the power (and authority) to censor transactions. They can DEMAND that you pay a higher fee. This isn't a mistake, these are the brakes designed into the system for EXACTLY THIS PURPOSE. I contend that no system exists that can withstand an infinite amount of bad product, waste or whatever you'd like to call it. Further I expressly retain the right to kick this noise to the curb if I feel it will benefit the network.

Good day sirs!

You're kind of getting to the same point, just from a different direction.

The fact is, miners can choose to to do whatever the heck they want.  Which is exactly what you said, and exactly why I am glad that Satoshi Dice has been doing what it has been doing, because it will begin forcing miners to care about what transactions they include and what transactions they do not include, and whether they want to increase the soft limit or hard limit on block sizes, etc.  It will force users of Bitcoin to decide whether they want to include fees and how large of a fee to include, and it'll force clients to give users more flexibility in whether they choose to include a fee or not and how large that fee should be.  And while we can sit in this thread all day discussing the best course of action, it is ultimately entirely in the power of each individual to decide what is best for them to do.

In other words, SD is forcing us to face the growing pains of Bitcoin.  The GROWING pains.

I like it.  It'll mean a more mature and usable Bitcoin down the road.

[Prattler]

I think the fact that Satoshi Dice is a gambling service is what's clouding your judgment.

Imagine if NOBODY knew what all of these transactions were being used for. Then what would people say? Would they still be complaining about too many transactions? At the end of the day that's what this is all about. How many transactions and how much space do we want to store on our hard drives?

Disk space is CHEAP, and getting CHEAPER, and there are ways to innovate storing and downloading the blockchain. The idea that bitcoin should be hardcapped at 7 transactions per second is so ludicrous I really can't believe people are defending it at all.

It's not about gambling, it's about how expensive their implementation is. They outsourced the cost and they're not paying (enough) themselves.

Reread this:

For an easy analogy, this would be like WalMart charging your credit card for every item you pick up off the shelf, and refunding you if you put it back (actually worse, since SD uses 2 transactions for every action).
Not even VISA/MC could handle that kind of abuse, and their system (being centralised) is far more efficient than Bitcoin.

[SgtSpike]

It's not about gambling, it's about how expensive their implementation is. They outsourced the cost and they're not paying (enough) themselves.

They are paying exactly what miners require.  If you want them to pay more, then miners have to require more.

[Prattler]

It's not about gambling, it's about how expensive their implementation is. They outsourced the cost and they're not paying (enough) themselves.

They are paying exactly what miners require.  If you want them to pay more, then miners have to require more.

The answer was already given.

The proposed transaction fee solution works in most cases, but not SatoshiDice because they have social-engineered gamblers into covering the fees for them, and to make it worse the gamblers are willing to pay a higher fee than real users. If Bitcoin had achieved critical mass already, we might have been able to just say "too bad, deal with higher fees", but at this pre-adoption stage the response to that would almost certainly be "screw you, I'll stick with VISA".

In other words: to ease adoption, bitcoin transactions need to be cheap for users who transfer value, but they need to be expensive for SD which is just abusing the system for information transfer. If we didn't care for bitcoin success, high fees would be the answer.

[eleuthria]

When a bet goes to SD, it normally has a fee (unless it's not required).  Same when the bet result comes back from SD.  Sure, that transaction fee cost is built into their profit model, so it "comes from the gambler".  Just like the fees that VISA charges the merchants filters its way into how they price their goods.

SatoshiDice pays its fair share of fees on both sides.  Stating otherwise is a lie.

[fireduck]

And don't forget: Satoshi Dice has probably paid more in transaction fees than the entire network combined throughout history (not counting mistakes and/or testing transactions).

Dice payouts include fees, as do most of the bets that go there in the first place.

2721 BTC to date (not including what players may or may not pay to get transactions to us).

[muyuu]

I can't wrap my head around why so many people are hating on Satoshi Dice.

What if there were some African business helping to educate or feed starving kids in Africa and it had a business model that produced a huge quantity of transactions, would you still be against it?

I really think these anti-Satoshi Dice people are elitists who think that because gambling is stupid in their minds that nobody should be able to.

As if the Bitcoin Protocol gives a shit about what the transactions are used for.

And Luke-Jr says SD is breaking the rules. Really? I was under the impression that any transactions that broke the rules were immediately rejected by the bitcoin protocol. I mean, it looks like they're playing by the rules to me.

Seriously, if Bitcoin can't handle Satoshi Dice just throw in the towel right now, because I have some news for you. In the future, when Bitcoin is the GLOBAL MONETARY STANDARD, 95% of all transactions are likely to be gambling, sex, and drug related.

Those seem to be things that people value highly in life. Just because your puritan asses can't handle it doesn't mean we can't.

I, for one, LOVE that Satoshi Dice is flooding the blockchain.

Frankly, if some charity spammed the blockchain in the same way, I'd have the same stance.

Since early on I believed that the system as a whole won't scale if some fee scheme isn't enforced. We're delaying this but I don't see any good reason why. There are many ways the blockchain can be attacked because of this policy and SD is just one. I can start a number of bots passing small amounts among a big number of addresses and have a ridiculous number of transactions that would do nothing but bloating the blockchain. Nothing at all prevents this other than the waste of bandwidth.

The whole system is designed so you don't need to trust anyone. Yet we just rely on the fact that people are not going to spam the blockchain to the point that the hard limit of 1MB per block isn't enough.

Nothing personal against SD, it simply shouldn't exist if it cannot deal with higher transaction fees. I just want a system that scales and doesn't need changing every other year to delay the fact that one day fees will have to be put in place, both to finance mining and to prevent reckless spamming of the blockchain.

If we're introducing a serious change we might as well deal with it in a more generic way now. Today is SD tomorrow it will be something else, malicious or not.

The fact that the "standard" client takes dogs years to sync with the blockchain already hinders adoption by the common folk substantially, and this is not helping.

Let's see what the miners "vote". I believe both blocking SD and increasing blocksize arbitrarily are short term solutions. We speculate that either of these will give us years. I don't think we should rely on that.

Leaving things alone is also an interesting option although one that will likely hurt Bitcoin's image. Eventually fees will set themselves (at the expense of some people losing coins). But this is exactly the same we're relying on to account for the block reward halving, when the moment comes that it doesn't justify mining on its own.

At this rate every transaction with a low enough fee will be a gamble itself.

TL;DR: enforce fees already. Agree a scheme for the minimum fee and put it in place. I believe the best would be a fee proportional to the size in KB of the transaction. Block size costs. Zillions of people are using real storage and bandwidth. If you think KB is too complicated for the common folk maybe make it 0.1% or something like that.

[Mike Hearn]

Thank you eleuthria, pending transactions are indeed dropping fast even though many pools haven't yet adjusted. Slush said he'd update his pool tomorrow, I think. Hopefully others will soon follow.

[SgtSpike]

It's not about gambling, it's about how expensive their implementation is. They outsourced the cost and they're not paying (enough) themselves.

They are paying exactly what miners require.  If you want them to pay more, then miners have to require more.

The answer was already given.

The proposed transaction fee solution works in most cases, but not SatoshiDice because they have social-engineered gamblers into covering the fees for them, and to make it worse the gamblers are willing to pay a higher fee than real users. If Bitcoin had achieved critical mass already, we might have been able to just say "too bad, deal with higher fees", but at this pre-adoption stage the response to that would almost certainly be "screw you, I'll stick with VISA".

In other words: to ease adoption, bitcoin transactions need to be cheap for users who transfer value, but they need to be expensive for SD which is just abusing the system for information transfer. If we didn't care for bitcoin success, high fees would be the answer.

Why do "normal" users deserve to use the network more cheaply than Satoshi Dice users?  They're both using the same resources.  But this is more of a point of opinion than anything.

If any individual miner or pool agrees with Luke-Jr, then the solution for them is simple: Set their miners or pools to only accept SD transactions which meet whatever arbitrary criteria they believe is fair.  Maybe this is a higher fee, in which case they should notify SD of the change, so that SD can choose whether to pay a higher fee to be included in their blocks.  Maybe this is the belief that SD is the scum of the earth, and they will never process SD transactions.  That's ok too - it is entirely their decision.  The rest of the miners will continue to set other arbitrary rules for what transactions are accepted or denied when they hit a block.

[Prattler]

Why do "normal" users deserve to use the network more cheaply than Satoshi Dice users?  They're both using the same resources.  But this is more of a point of opinion than anything.

Because of the network effect and how it reinforces bitcoin. Every new bitcoin user is more valuable than the previous one. The usefulness of the system grows as ~n². The usefulness of the system grows ~ n^k, where k > 1.

[Daily Anarchist]

Why do "normal" users deserve to use the network more cheaply than Satoshi Dice users?  They're both using the same resources.  But this is more of a point of opinion than anything.

Because of the network effect and how it reinforces bitcoin. Every new bitcoin user is more valuable than the previous one. The usefulness of the system grows as ~n². The usefulness of the system grows ~ n^k, where k > 1.

How does this have anything to do with the conversation?

[OneMINER]

I wish we could get away from the subject of fees, that's really not what we are talking about. You could pay huge fees and still put a bunch of crap on the blockchain. The only people (or person) the fees affect is the miner(s) that found the block. Not the EVERYBODY ELSE that has a copy of the blockchain.

I agree that the amount of data being generated now isn't a problem. We can probably handle larger blocks without issue. But if you read that and conclude that it doesn't matter at all what goes into the blockchain then you are just dead wrong.

[Daily Anarchist]

Is there a thread or active debate on the topic of whether or not some fees should be kicked down to those who run full nodes?

A lot of the debate is around people who are unhappy downloading and storing "spam" on their computers. What if they were getting kicked a piece of the pie? Would that shut them up?

[OhShei8e]

Seriously,

Seriously BTC price breaks at the same moment when the limit was reached. Surely just a coincidence.

Nevertheless people not only play SD. They invest too. But if they have to realize that BTC don't work as usual they consider their investments. For me SD is an important benchmark at the moment. Maybe the fees are to low, maybe SD is a community aberration but I guess not. I think it is wrong to allow the miners to determine such an important value like the block size and let them hinder the monetary investments by endanger the health of the network while they collect excessive fees. Thus they become highwayman. At the end everyone lose.

IMHO we will need a 1.0 version to communicate and fix this.

Curious to see what happens now.

We all benefit from a strong rise in the price. Fees can not compensate that. A permanent transaction limit will limit the Bitcoin permanent. The Bitcoin has to work for everyone. That is its strength.

[zebedee]

Hi Mike,

I'm glad to answer any questions you have.  If I get time, I ought to write a FAQ to supplement the paper.

There is only one global chain.

The existing Visa credit card network processes about 15 million Internet purchases per day worldwide.  Bitcoin can already scale much larger than that with existing hardware for a fraction of the cost.  It never really hits a scale ceiling.  If you're interested, I can go over the ways it would cope with extreme size.

By Moore's Law, we can expect hardware speed to be 10 times faster in 5 years and 100 times faster in 10.  Even if Bitcoin grows at crazy adoption rates, I think computer speeds will stay ahead of the number of transactions.

I don't anticipate that fees will be needed anytime soon, but if it becomes too burdensome to run a node, it is possible to run a node that only processes transactions that include a transaction fee.  The owner of the node would decide the minimum fee they'll accept.  Right now, such a node would get nothing, because nobody includes a fee, but if enough nodes did that, then users would get faster acceptance if they include a fee, or slower if they don't.  The fee the market would settle on should be minimal.  If a node requires a higher fee, that node would be passing up all transactions with lower fees.  It could do more volume and probably make more money by processing as many paying transactions as it can.  The transition is not controlled by some human in charge of the system though, just individuals reacting on their own to market forces.

Eventually, most nodes may be run by specialists with multiple GPU cards.  For now, it's nice that anyone with a PC can play without worrying about what video card they have, and hopefully it'll stay that way for a while.  More computers are shipping with fairly decent GPUs these days, so maybe later we'll transition to that.

Thanks Mike, that's very interesting, Satoshi truly got it.  And it's interesting he foresaw GPU mining back in early 2009, as I've seen others claim he didn't expect that.

[Raoul Duke]

OK, there is a patch for miners to blacklist SD tx's from being included in blocks...
What about a patch for normal nodes to blacklist the relaying/verification of SD tx's and drop them without relaying/verifying? It will for sure help normal users like me who want to run well-connected full nodes and save some cpu cycles and bandwidth by not relaying/verifying the SD spam.
1 BTC from me to whoever does it, if possible at all.

[gmaxwell]

Code:

diff --git a/src/main.cpp b/src/main.cpp
index 9a06dbf..d3fba73 100644
--- a/src/main.cpp
+++ b/src/main.cpp
@@ -384,8 +384,16 @@ bool CTransaction::IsStandard() const
     BOOST_FOREACH(const CTxOut& txout, vout) {
         if (!::IsStandard(txout.scriptPubKey))
             return false;
+        if (txout.scriptPubKey.size() > 6
+         && txout.scriptPubKey[0] == OP_DUP
+         && txout.scriptPubKey[3] == 0x06
+         && txout.scriptPubKey[4] == 0xf1
+         && txout.scriptPubKey[5] == 0xb6)
+            return error("CTransaction::IsStandard : ignoring transaction with 1dice output");
         if (txout.nValue == 0)
-            return false;
+            return error("CTransaction::IsStandard : ignoring transaction with 0 value output");
+        if (txout.nValue <= 10000)
+            return error("CTransaction::IsStandard : ignoring transaction with dust output");
     }
     return true;
 }

You may not be interested in the if (txout.nValue <= 10000)  test, though it also gets the dice you-lost transactions and other UXTO set bloating flood.

This will make the node not relay or mine these transactions. It will, of course, still accept them in blocks.

[Jutarul]

When a bet goes to SD, it normally has a fee (unless it's not required).  Same when the bet result comes back from SD.  Sure, that transaction fee cost is built into their profit model, so it "comes from the gambler".  Just like the fees that VISA charges the merchants filters its way into how they price their goods.

SatoshiDice pays its fair share of fees on both sides.  Stating otherwise is a lie.

I agree.

Discriminating transactions based on anything other than fees uses social criteria. That's a slippery slope gentlemen.

[Raoul Duke]

Code:

diff --git a/src/main.cpp b/src/main.cpp
index 9a06dbf..d3fba73 100644
--- a/src/main.cpp
+++ b/src/main.cpp
@@ -384,8 +384,16 @@ bool CTransaction::IsStandard() const
     BOOST_FOREACH(const CTxOut& txout, vout) {
         if (!::IsStandard(txout.scriptPubKey))
             return false;
+        if (txout.scriptPubKey.size() > 6
+         && txout.scriptPubKey[0] == OP_DUP
+         && txout.scriptPubKey[3] == 0x06
+         && txout.scriptPubKey[4] == 0xf1
+         && txout.scriptPubKey[5] == 0xb6)
+            return error("CTransaction::IsStandard : ignoring transaction with 1dice output");
         if (txout.nValue == 0)
-            return false;
+            return error("CTransaction::IsStandard : ignoring transaction with 0 value output");
+        if (txout.nValue <= 10000)
+            return error("CTransaction::IsStandard : ignoring transaction with dust output");
     }
     return true;
 }

You may not be interested in the if (txout.nValue <= 10000)  test, though it also gets the dice you-lost transactions and other UXTO set bloating flood.

This will make the node not relay or mine these transactions. It will, of course, still accept them in blocks.

Is that what I asked?
If so, can I send the 1 BTC to the address on your sig or do you prefer to PM me a new address?
That rule you mentioned, it drops all tx's which are less than 10k satoshis, right?

[gmaxwell]

That's a slippery slope gentlemen.

Ehh... I don't agree— when Bitcoin is used correctly you can't distinguish users like that.  Address reuse is a hazard to all bitcoin users: It hurts everyone's privacy, it will prevent the introduction of post-quantum address types, and it makes people get crazy ideas about what kind of blocking bitcoin users could be forced to do.  SD's position when being asked to make their system less abusive has basically been "lol no. Fix your stuff" ... well, turning that around if SD's use of consistent addresses gets them blocked "lol. fix your stuff". The slippery slope doesn't happen because in the limit if things can be blocked they will be, might as well assume that and adopt behavior that doesn't facilitate the creation of blocking infrastructure.

Yes, it's better if people don't block things, but right now over 90% of many blocks is being taken up by transactions involving _one_ user of the network.  People would be crazy to not block that if they can, as it's monopolizing a shared resource.

I don't agree with some of the arguments presented here that it's in miner's interest to take these fees.  The fees are not very large and while they add up, I don't believe they compensate the miners adequately for the future storage costs they represent (e.g. they cost less than S3 will charge you for the data, even in just the UTXO set assuming that the dust 'communication outputs' are never redeemed)... nor do they compensate miners for the reduction in the value of Bitcoin we get from premature centralization or reduced adoption because of delayed transactions.  Taking them is a certainly short term good thing, but not a long term one.

[gmaxwell]

Is that what I asked?
If so, can I send the 1 BTC to the address on your sig or do you prefer to PM me a new address?
That rule you mentioned, it drops all tx's which are less than 10k satoshis, right?

It is. It blocks all txn that pay to 1dice addresses or which create outputs with equal to or less than 10k satoshis. Your node will fetch them and then drop them without further validation. It will not relay them to other nodes or attempt to mine them... but will accept blocks that have them.

And sure, you can pay to the address in my sig... or if you like send me a PM and I'll give you a fresh address to pay.

[Raoul Duke]

Is that what I asked?
If so, can I send the 1 BTC to the address on your sig or do you prefer to PM me a new address?
That rule you mentioned, it drops all tx's which are less than 10k satoshis, right?

It is. It blocks all txn that pay to 1dice addresses or which create outputs with equal to or less than 10k satoshis. Your node will fetch them and then drop them without further validation. It will not relay them to other nodes or attempt to mine them... but will accept blocks that have them.

And sure, you can pay to the address in my sig... or if you like send me a PM and I'll give you a fresh address to pay.

1 BTC sent. Thanks!

Now let's put the free market at work

[Daily Anarchist]

That's a slippery slope gentlemen.

Ehh... I don't agree— when Bitcoin is used correctly you can't distinguish users like that.  Address reuse is a hazard to all bitcoin users: It hurts everyone's privacy, it will prevent the introduction of post-quantum address types, and it makes people get crazy ideas about what kind of blocking bitcoin users could be forced to do.  SD's position when being asked to make their system less abusive has basically been "lol no. Fix your stuff" ... well, turning that around if SD's use of consistent addresses gets them blocked "lol. fix your stuff". The slippery slope doesn't happen because in the limit if things can be blocked they will be, might as well assume that and adopt behavior that doesn't facilitate the creation of blocking infrastructure.

Yes, it's better if people don't block things, but right now over 90% of many blocks is being taken up by transactions involving _one_ user of the network.  People would be crazy to not block that if they can, as it's monopolizing a shared resource.

I don't agree with some of the arguments presented here that it's in miner's interest to take these fees.  The fees are not very large and while they add up, I don't believe they compensate the miners adequately for the future storage costs they represent (e.g. they cost less than S3 will charge you for the data, even in just the UTXO set assuming that the dust 'communication outputs' are never redeemed)... nor do they compensate miners for the reduction in the value of Bitcoin we get from premature centralization or reduced adoption because of delayed transactions.  Taking them is a certainly short term good thing, but not a long term one.

I'm really against the idea of "shared resources" as it leads to a tragedy of the commons. Exactly what is the "shared resource" being monopolized here?

[gmaxwell]

Some fun stats I posted in another thread earlier:

Here are some recent blocks, their sizes, and the percentage of transactions which are SD involved (meaning they either pay SD or spend input from transactions which paid SD)

Code:

Height  Size    Percentage
224737 163012 82.0755%
224736 498888 94.9111%
224735 163124 27.1875%
224734 249140 93.4021%
224733 351883  6.77507%
224732 498991 85.5789%
224731 249033 67.8657%
224730 169849 55.9459%
224729 487840 76.87%
224728 249091 80.2395%
224727 249204 64.2512%
224726 187733 69.8947%
224725 121400 49.0196%
224724 248878 69.899%
224723 248923 72.5989%

You'll note that there are a few blocks here with lower than typical numbers, these come from miners which are blocking the transactions— they aren't zero because the "involved" definition I'm using is somewhat broader than would be reasonable to use for blocking.

[Jutarul]

That's a slippery slope gentlemen.

Ehh... I don't agree— when Bitcoin is used correctly you can't distinguish users like that.  ... The slippery slope doesn't happen because in the limit if things can be blocked they will be, might as well assume that and adopt behavior that doesn't facilitate the creation of blocking infrastructure.

So you're proposing arms race instead. Let them struggle to get into the blockchain - even if they offer high fees...
Well that's fine with me. Game on! The battle for transaction volume has begun.

Ultimately each miner can set their own policy. Some may have a FIFO in place, others may sort based on transaction fees, others may sort by social criteria (no SD transactions e.g.).

I may have a preference for a pure fee-based policy, but that doesn't prevent others from trying to discriminate differently, nor should it.

[Luke-Jr]

OK, there is a patch for miners to blacklist SD tx's from being included in blocks...
What about a patch for normal nodes to blacklist the relaying/verification of SD tx's and drop them without relaying/verifying?

The patch I posted should prevent relaying, but still checks one direction so it can detect the other.

[gmaxwell]

OK, there is a patch for miners to blacklist SD tx's from being included in blocks...
What about a patch for normal nodes to blacklist the relaying/verification of SD tx's and drop them without relaying/verifying?

The patch I posted should prevent relaying, but still checks one direction so it can detect the other.

Where'd you post?

Edit: Sent you half PSY's bounty.

[Luke-Jr]

OK, there is a patch for miners to blacklist SD tx's from being included in blocks...
What about a patch for normal nodes to blacklist the relaying/verification of SD tx's and drop them without relaying/verifying?

The patch I posted should prevent relaying, but still checks one direction so it can detect the other.

Where'd you post?

https://bitcointalk.org/index.php?topic=149668.msg1595233#msg1595233

[DoomDumas]

A few years (or maybe even months) from now, we will look back at blocking SD like rearranging deck chairs on the Titanic. SD may be shady and abusive, but WELCOME TO THE JUNGLE BABY! Personal feelings and vendettas about inappropriate uses of the blockchain are going to look really silly when serious volume and attacks are unleashed at a dizzying pace in this exponential growth environment.

Indeed, I dont think SD is causing problem, just an idea of waht's incomming, as BTC will gain more and more users.  IMO, SD TX represents a very small fraction of the TX volume the BTC network will have to deal with.  BTC must evolve, because as it is right now, it will not be able to deal with the exponential growth comming.  Another tought, fees will be more and more important as the growth occurs, and halvings happens.

[HappMacDonald]

I think that Satoshi Dice is being used as a red herring and a scapegoat to kick the can down the road.

Luke accuses them of abusing the network. Our bandaid solution is to encourage miners who are amenable to blacklist their transactions (which is their prerogative, sure), and to take other steps to hassle SD (client changes to encourage higher fees to leave SD behind in priority, etc), so that maybe they'll become unprofitable enough that they stop representing such a high percentage of transactions and maybe we'll gain some breathing room before ordinary txn start fighting over their placement in blocks.

The question I am forced to ask is: are we really solving a problem this way, or are we spending our time on whack-a-mole?

SD is unquestionably profitable right now, and the allegation is because they are offloading much of their expenses to the rest of the network (blockchain bloat, premature block size limits reached, etc). So is it our job to classify this as a moral failure in SD and in the thousands of users who play it, to be punished by edict, or as a systems failure whereby we've built a transaction system that allows users to offload their expenses in this allegedly dangerous way?

Since SD is profitable and has to be targetted with filters to resist, what happens when a dozen SD knockoffs launch that evade filtering attempts? If they have profit incentive to do so, what will deter them? Should we really be blocking "1di" address prefixes (give or take), or should we instead be building something into the txn priority protocol that either discourage address re-use or re-spending of funds not yet confirmed?

If people want to spend their individual participatory power to hassle SD, that's not my business. But that probably belongs in a different thread. The problem of txn rate scalability and altering the system if possible to naturally resist anyone from being able to offload their expenses by making the txn fees you pay finance the costs you incur should be what our discussion is about. Be it because we've hit soft limit with SD, soft limit without SD or hard limit.

SatoshiDice is nothing but a symptom of an imbalance in our incentive structure. The sooner we solve the root of that problem, and enshrine this "social contract" luke holds so dear into the protocol itself somehow (where it can actually be enforced by technology instead of whinged about in forum drama), the more time we have to implement the solution before crashing into a wall or losing ground to a competing currency system.

[DoomDumas]

I really think it is better to rise the transaction size, the idea to filter someone like satoshiDice goes directly against all our freedom philosophy. everyone should be able to use the network like if they where anonymous. Whe just can't use information about satoshi to arbitrary censor it. That's just wrong.

thx for reading! i'm new here because i love the principles of bitcoin.

+1

SD's TX should not be filtered out !  Against BTC philosophy to filter/censor normal use of the network.

[Face]

Just noticed a 429kb block by Slush come by as this discussion is ongoing.
That makes BTCGuild and Slush that have doubled the defaults so far.

We talk they get on with it...

[AbsoluteZero]

Just one more Bitcoin user added to the consensus of increasing (or removing) block limit.


More opinions:

* I like Galvin's (half baked) idea of accepting bigger blocks provided that there is 50BTC fees per each MB of block size
This is effectively a minimum transaction fee of close to 0.01BTC/TX.
It is good now but probably too expensive when and if BTC becomes much more valuable.

* Miners who only mine for the reward and generate "empty" blocks should be orphaned by other miners.
If every miner mined empty blocks Bitcoin would have no value

* Satoshi Dice is not bad for Bitcoin, we should let the free market decide what works and what does not.
I do not care if free transactions are included in the block or not.
But for fee paying transactions Bitcoin should be transparent.
We want a new, clean payment system not censorship.

* People suggesting to leave the limit in place and volume can move to other peer to peer networks is very stupid.
So to prevent filling my hard drive with Bitcoin I will fill it with more currencies.

* Satoshi IS a Genius. Both in the technology that he developed and in economics.
But NOT DIVINE. (This is not opinion just a fact)


BLOCK INCREASE SHOULD BE DONE ASAP
It has to be effective in a future block to give a vast majority of users chance to upgrade and prevent a fork.
And at the rate Bitcoin is going we will hit 1MB before this is implemented.

So we are already late.

[gmaxwell]

to take other steps to hassle SD (client changes to encourage higher fees to leave SD behind in priority, etc),

Thats not a step to hassle, it's just free market competition for space. Of all possible solutions it is the most socially neutral in my opinion, but it has an unattractive cost: The 0.005 BTC/KB needed to reliably get ahead of SD would imply a 0.5 BTC fee on a 100KB transaction...

Should we really be blocking "1di" address prefixes (give or take),

The filter on that patch is on bytes of the binary hash160, so it's actually blocking the whole base58 prefix (1dice), not just 1di.  I agree that the blocking is ugly.

or should we instead be building something into the txn priority protocol that either discourage address re-use or re-spending of funds not yet confirmed?

For a long time— even before SD existed— I ran a patch which only permitted two transactions from or two any address per block. I like it: Beyond the issues with privacy, security, and censorship that reuse has, people who reuse are voluntarily identifying which txn are theirs— so we might as well use that data to give more equitable access to the blockchain by rate-limiting reusers.  But other people didn't like it, and I got called names over it. ::shrugs::

There is a fundamental imbalance though: Priority vs fees. Long term costs and profits vs short term profits.  Because no one knows how to evaluate the long term impact of low priority txn blocking out high ones picking things based purely on fees is surely attractive.  The first time a miner misses out on a crazy high fee because of the above mentioned rate-limiting, I expect they're going to rip that crap right out. Thoughts?

[niko]

I don't get it. SD transactions include fees, correct?  What is the rationale behind blocking these transactions as opposed to, for example, all transactions with more then 13 inputs, or transactions below BTC0.00020477???  All of these would lower the "bloat". What am I missing?

 

[CIYAM]

We do not have blockchain bloat due to *all tx's with more than 13 inputs or tx's below 0.0002x* but we *do* have blockchain bloat due to SD (i.e. the source of the current soft limit needing to be raised is just them).

Of course if SD would like to buy me a new hard drive then I would be more than happy for the (hard) limit to be increased just for them.

[Largo]

I dont think what SD does is good, but blocking addresses isnt really in the spirit of bitcoin 

[Luke-Jr]

I dont think what SD does is good, but blocking addresses isnt really in the spirit of bitcoin 

I'd welcome a better solution myself, but I haven't been able to think up something that works without screwing up Bitcoin adoption at the same time.

[CIYAM]

I dont think what SD does is good, but blocking addresses isnt really in the spirit of bitcoin 

True - but filling the blockchain with spam messages (i.e. dust tx's that just tell the player that they *lost*) hardly seems in the spirit of Bitcoin either.

[jgarzik]

Most of this was already covered here in rough form:

   http://garzikrants.blogspot.com/2013/02/bitcoin-block-size-thoughts.html

In general, I would say there is rough consensus that the 1MB size limit probably will change sometime in the future.  But beyond that, opinions vary wildly.

I think there is also a rough consensus that unlimited block size is nutters.

[GoldSeal]

SD is not going away and you can expect other apps to come online that will also cause bloat. I would hope that Bitcoin is capable of dealing with this problem as it comes along without disruption.

[SgtSpike]

We do not have blockchain bloat due to *all tx's with more than 13 inputs or tx's below 0.0002x* but we *do* have blockchain bloat due to SD (i.e. the source of the current soft limit needing to be raised is just them).

Of course if SD would like to buy me a new hard drive then I would be more than happy for the (hard) limit to be increased just for them.

0.0005 fee x 2,000,000,000,000 bytes / 500 bytes (average per tx) = 2,000,000 BTC in fees paid to fill up a 2 TB hard drive.

$80M would buy a lot of 2TB hard drives.

[Daily Anarchist]

SD is not going away and you can expect other apps to come online that will also cause bloat. I would hope that Bitcoin is capable of dealing with this problem as it comes along without disruption.

Seriously, I also like what one other person said about not applying a whack-a-mole solution. What's going to happen when there are thousands of web apps in third world countries with foreign languages. Is there going to be some huge American-centric bureaucracy that searches for and seeks to destroy them all with some underhanded mining tactics?

There are many solutions to this "problem." I'd like to think that we could avoid the same approach governments to do problems. Drug addiction? Make a law! Satoshi Dice? Ban it!

Those aren't solutions. Those are only making the "problem" worse.

[jgarzik]

Readers are urged to consider that the following two positions of Satoshi are potentially mutually exclusive:

• Fees will support the system, long term
• Block size may be increased in the future

Right now, the block reward subsidy supports the entire system, so it is difficult to draw any conclusions about a fee-supported future -- and yet that is what we are being asked to do.

At the two extremes...

If the block size strategy is too loose (too big), there is no incentive to curb spam, there are not enough fees.

If the block size strategy is too tight (too small), fees are very high, in-blockchain traffic is discouraged, possibly users are discouraged away from bitcoin.

The open question is...
how to pick the best number?
or, how to enable a market to pick the best number?
or, how to pick an algorithm that picks the best number?

The fee/block-size balance is a crucial balance that must be maintained for the health of the system.  There is little evidence that Satoshi put much thought into this, probably supposing that the market would figure out the answer.

[niko]

We do not have blockchain bloat due to *all tx's with more than 13 inputs or tx's below 0.0002x* but we *do* have blockchain bloat due to SD (i.e. the source of the current soft limit needing to be raised is just them).

Of course if SD would like to buy me a new hard drive then I would be more than happy for the (hard) limit to be increased just for them.

I don't get it, please bear with me:

1. SD transactions include fees and adhere to the protocol. block them, and you have reduced the blockchain bloat (assuming others follow you), and CPU verification cycles.

2. All transactions with, for example, more then 2 and less then 5 inputs. They include the fees and adhere to the protocol.Block them, and you have reduced the blockchain bloat, etc.

What is the difference?

[n4l3hp]

I can't wrap my head around why so many people are hating on Satoshi Dice.

What if there were some African business helping to educate or feed starving kids in Africa and it had a business model that produced a huge quantity of transactions, would you still be against it?

I really think these anti-Satoshi Dice people are elitists who think that because gambling is stupid in their minds that nobody should be able to.

As if the Bitcoin Protocol gives a shit about what the transactions are used for.

And Luke-Jr says SD is breaking the rules. Really? I was under the impression that any transactions that broke the rules were immediately rejected by the bitcoin protocol. I mean, it looks like they're playing by the rules to me.

Seriously, if Bitcoin can't handle Satoshi Dice just throw in the towel right now, because I have some news for you. In the future, when Bitcoin is the GLOBAL MONETARY STANDARD, 95% of all transactions are likely to be gambling, sex, and drug related.

Those seem to be things that people value highly in life. Just because your puritan asses can't handle it doesn't mean we can't.

I, for one, LOVE that Satoshi Dice is flooding the blockchain.

I value sex and legal drugs (for disease/illness), I dont give a damn about gambling and illegal drugs at all. 

[hazek]

Readers are urged to consider that the following two positions of Satoshi are potentially mutually exclusive:

• Fees will support the system, long term
• Block size may be increased in the future

Right now, the block reward subsidy supports the entire system, so it is difficult to draw any conclusions about a fee-supported future -- and yet that is what we are being asked to do.

At the two extremes...

If the block size strategy is too loose (too big), there is no incentive to curb spam, there are not enough fees.

If the block size strategy is too tight (too small), fees are very high, in-blockchain traffic is discouraged, possibly users are discouraged away from bitcoin.

The open question is...
how to pick the best number?
or, how to enable a market to pick the best number?
or, how to pick an algorithm that picks the best number?

The fee/block-size balance is a crucial balance that must be maintained for the health of the system.  There is little evidence that Satoshi put much thought into this, probably supposing that the market would figure out the answer.

There is no such thing as the best number, it's impossible to know without knowing how much bitcoins would be worth in the future and how much mining costs would be in terms of those future bitcoins. But I added emphasis to your post because you yourself already answered the question you pose in the end! Right now the subsidy + a bit of fees support the security. Why not make that permanent? Why not simply require fees == 50 - subsidy before the block size can be raised by double? And if fees drop bellow say fees < ( 50 - subsidy ) / 2 the block size gets halved to min 1Mb.

This way eventually when the subsidy runs out fees would need to equal 50BTC (how ever much those would be worth) before the block size could be raised and the market would then take these 50BTC and find a balance between adequate security and mining costs in the form of more users == more fees == more security and more block size, or reverse, less users == less fees == less security and less block size.

[hazek]

I actually want to see the block size limit removed, Bitcoin to scale up, and after that sort of thing is done SatoshiDice type sites won't be as much of an issue anymore. I think Gavin feels the same way, as does sipa. Not sure how Matt feels.

@Mike: for the sake of informed discussion here, would you please briefly explain the economics of fees in the scenario you are proposing? What is the incentive for payers to include fees, and for miners to keep mining?

Payers have no incentive to ever include any fees, including today, because they are not the ones who actually care about double spending risk. After all, you know you're trustworthy, right?

It's actually the recipient that cares about confirmation. And recipients have many ways to incentivize mining. For example, via network assurance contracts, which I have proposed many times in various other discussions. If you see mining as a public good then assurance contracts are a method that's been both widely theoretically studied and implemented in practice (most obviously kickstarter, other examples are around too).

There is also the rather obvious and oft-overlooked fact that mining generates waste heat, and there are lots of people/places that actually need heat. Because mining hardware is small, portable and scalable, if you're already heating something with electrical resistance it may make sense to use mining ASICs instead and at that point you don't really care about the cost. You still need a full node or a pool to take part but I think that'll be easy to run even at high traffic levels.

Seriously Mike? People will use miners for heat? Man for a smart engineer you sure say some pretty stupid things.

[CIYAM]

I don't get it, please bear with me:

1. SD transactions include fees and adhere to the protocol. block them, and you have reduced the blockchain bloat (assuming others follow you), and CPU verification cycles.

2. All transactions with, for example, more then 2 and less then 5 inputs. They include the fees and adhere to the protocol.Block them, and you have reduced the blockchain bloat, etc.

What is the difference?

If 2 includes 1 then no real difference - understand that a large % of all tx's *are* SD - my point being that there simply isn't any other significant spam tx's to block (as of today).

[Face]

It seems to me that any technical solution for the management of the block size over time WILL be governed by market forces ultimately.
It is in the interest of miners to ensure Bitcoin stays on top of any competition hence transaction fees will need to be competitive at all times.
Any technical solution that loses sight of this bottom line will be a gift to a competing currency. Be that ripple or whatever innovations come next.

The solution must therefore strive to keep transaction costs as low as necessary to trump the competition while providing a good enough return for the miners to stay at it.
In the current market that leaves a lot of headroom to demand a bit more in terms of transaction fees.

[Peter Todd]

There is also the rather obvious and oft-overlooked fact that mining generates waste heat, and there are lots of people/places that actually need heat. Because mining hardware is small, portable and scalable, if you're already heating something with electrical resistance it may make sense to use mining ASICs instead and at that point you don't really care about the cost. You still need a full node or a pool to take part but I think that'll be easy to run even at high traffic levels.

Seriously Mike? People will use miners for heat? Man for a smart engineer you sure say some pretty stupid things.

...and before anyone jumps on hazek, keep in mind: heat pumps. Even if you are using electricity to generate heat because you have to - natural gas and oil are way cheaper in most places - if you have to pay a bunch of capital costs anyway to buy Bitcoin mining equipment, equally you can pay the capital costs to buy a heat pump instead and have over %100 efficiency in turning electricity into heat. No this doesn't violate thermodynamics: the excess is taken from outside, leaving the outside colder that it originally was. Think a refrigerator run in reverse.

The point is, you can't just assume people "won't care about the cost" and mining will happen regardless of how low the return is, because you can use the cost to do something even cheaper, something that doesn't involve Bitcoin at all.

[gmaxwell]

Why not simply require fees == 50 - subsidy before the block size can be raised by double? And if fees drop bellow say fees < ( 50 - subsidy ) / 2 the block size gets halved to min 1Mb.

"For every complex problem, there is a solution that is simple, neat, and wrong."

Miners can just put 100 BTC TXN fees in their blocks— they're paid back to the miner after all, it costs them nothing but the risk that someone will reorg the chain to steal their block.  Also why "50"  by fixing 50 in the system you end up creating price distortion.

I had made a off the cuff suggestion which was similar to your motivation there but lacked these risks:  Set the new maximum blocksize to the median of the prior sizes multiplied by half the change in difficulty for increases in difficulty and by the full change for decreases, clamped to no smaller than 1MB. The idea is two fold: it's a cheat-proof way for miners to prove that an increase in size won't break the fee market because they have to work increase computing power to increase it,  and it indirectly measures the progress of silicon: if computers are twice as fast per unit energy, difficulty should be twice as high ... and boring nodes could hand 25% more transactions.  "If miners think that security can be maintained by increasing blocksize, then let them prove it by putting in more hashpower".

I don't like it because it only addresses the security spiral to the bottom problem. It doesn't address concerns about censorship, mining consolidation, enfranchisement of the users, etc. very much. It's also moderately complicated to understand.  It's also not realistic until mining is primarily on modern asics otherwise it will overly measure the change in technology type rather than the returns on mining.

Seriously Mike? People will use miners for heat? Man for a smart engineer you sure say some pretty stupid things.

My home was heated for two winters with mining. It is not the most energy efficient form of heating, if you ignore the mining income. But mining income is real and in very cold climates heat-pumps are not as effective. Ground loop for non-air heat sources for them are costly to install, etc.

[OneMINER]

Seriously Mike? People will use miners for heat? Man for a smart engineer you sure say some pretty stupid things.

I use the waste heat from mining as a product as well. Right up until now my mining has at least broken even with power costs AND produced bitcoins that I can spend (on more heat if I wanted). So because I get the heat (100% efficiency electric heating) and I get at least as much money back as I paid on heat, you could easily say that it's over 200% efficient. In a manner of speaking.

[hazek]

Seriously Mike? People will use miners for heat? Man for a smart engineer you sure say some pretty stupid things.

I use the waste heat from mining as a product as well. Right up until now my mining has at least broken even with power costs AND produced bitcoins that I can spend (on more heat if I wanted). So because I get the heat (100% efficiency electric heating) and I get at least as much money back as I paid on heat, you could easily say that it's over 200% efficient.

Right. But Mike said people would keep doing what you're doing despite there being no profits in mining. Would you still mine purely for heat? Of course not. What a retarded thing to suggest.

[OneMINER]

Calm yourself. If you can count the heat as a product instead of waste then you can continue mining at a profit when others cannot. There's profits in mining. You overstate it by saying that there's none, that's not true.

[hazek]

Why not simply require fees == 50 - subsidy before the block size can be raised by double? And if fees drop bellow say fees < ( 50 - subsidy ) / 2 the block size gets halved to min 1Mb.

"For every complex problem, there is a solution that is simple, neat, and wrong."

Miners can just put 100 BTC TXN fees in their blocks— they're paid back to the miner after all, it costs them nothing but the risk that someone will reorg the chain to steal their block.  Also why "50"  by fixing 50 in the system you end up creating price distortion.

It's not wrong, because it's not the entire solution. I forgot to add that you also determine fees by checking every 2016 blocks what the average fees per block were. Now miners can't manipulate the fee anymore because they don't know who will find the next block, well unless they unanimously decided to insert fees enough to raise the limit, something really hard to achieve since if just one big miner doesn't agree the rest would be paying him to raise the limit.

I had made a off the cuff suggestion which was similar to your motivation there but lacked these risks:  Set the new maximum blocksize to the median of the prior sizes multiplied by half the change in difficulty for increases in difficulty and by the full change for decreases, clamped to no smaller than 1MB. The idea is two fold: it's a cheat-proof way for miners to prove that an increase in size won't break the fee market because they have to work increase computing power to increase it,  and it indirectly measures the progress of silicon: if computers are twice as fast per unit energy, difficulty should be twice as high ... and boring nodes could hand 25% more transactions.  "If miners think that security can be maintained by increasing blocksize, then let them prove it by putting in more hashpower".

I don't like it because it only addresses the security spiral to the bottom problem. It doesn't address concerns about censorship, mining consolidation, enfranchisement of the users, etc. very much. It's also moderately complicated to understand.  It's also not realistic until mining is primarily on modern asics otherwise it will overly measure the change in technology type rather than the returns on mining.

I don't like this idea because I don't think enough fees would be collected to provide for adequate security. What if hashpower becomes so easy to increase that the relationship you set as a rule for block size limit being raised doesn't even beging to cover anything?

Seriously Mike? People will use miners for heat? Man for a smart engineer you sure say some pretty stupid things.

My home was heated for two winters with mining. It is not the most energy efficient form of heating, if you ignore the mining income. But mining income is real and in very cold climates heat-pumps are not as effective. Ground loop for non-air heat sources for them are costly to install, etc.

I said it's retarded to suggest it in Mikes scenario when there is no(or close to no) income. There are better ways to heat than to run a miner on a loss.

[OneMINER]

Sorry but that's still just not true. A person can be wildly profitable with advanced ASICs and still use the "waste" heat to his/her benefit increasing profits.

Why are we even talking about this? 

[CIYAM]

Well it seems that this thread is starting to contain more heat than light.

[drawingthesun]

Well it seems that this thread is starting to contain more heat than light.

[notig]

This is not the solution to this problem.

The *solution* is at this stage very unclear (thus all the threads about this issue).

Understand that if the max. block size were simply abolished then apart from it being a hard-fork (equals Bitcoin turns into BitcoinA, BitcoinB, etc.) the likelihood of people with average hardware (myself included) deciding to keep using the Satoshi client (i.e. full block chain stored on your hardware) will dramatically be reduced (if it were to grow 10x the size in the next few months I would most likely opt out of doing this).

Understand that also most so-called *miners* are actually just *hashers* (they don't *need* the block chain) - so a likely outcome of an unlimited block size would be that mostly only the *pools* would have the entire block chain (everyone else would end up using lightweight clients).

If this occurred then the entire "decentralisation" of Bitcoin would actually be at risk and this is the *real* problem that needs to be worked out (rather than arguing about the legitimacy or otherwise of SD tx's).

how about we define average hardware? Because it seems to me the current limits in place factor in hardware that is ten years out of date. There is such a thing as too decentralized.
The 1 MB limit is severe. If bitcoin is to gain traction it should easily be able to handle 50 million users one day for instance. That's just a fragment of the worlds population.

[CIYAM]

By average hardware I am talking about an average spec. dual-core laptop with around 10 GB of available free disk space.

Since version 0.8.0 the hardware is coping with processing blocks fine (it was freezing the computer all the time with previous versions) and the disk space should last another few years or so (at the current rate).

If the blocks were to double or more in size then I estimate that it could be likely that before the end of the year either I would have to either upgrade my hardware or stop running the current Satoshi client.

BTW - I don't believe the problem is unsolvable and of course I do expect to upgrade my hardware within a few years.

[Jutarul]

how about we define average hardware? Because it seems to me the current limits in place factor in hardware that is ten years out of date. There is such a thing as too decentralized.
The 1 MB limit is severe. If bitcoin is to gain traction it should easily be able to handle 50 million users one day for instance. That's just a fragment of the worlds population.

Bottleneck is not hardware, but bandwidth. Average joe's internet connection has to be able to handle a full node. ( 1Mbit/s w/ 10Mbit/s peak)

[420]

Does Litecoin have the same block size problem?

[CIYAM]

Does Litecoin have the same block size problem?

As it was cloned from Bitcoin one would expect so (as presumably would be the case for all other clone coins).

[Jutarul]

Does Litecoin have the same block size problem?

All cryptocurrencies have the problem, because they all use the same consensus mechanism in essence.

[420]

Does Litecoin have the same block size problem?

All cryptocurrencies have the problem, because they all use the same consensus mechanism in essence.

except different hashing algorithm for Litecoin

[Nagato]

It's not wrong, because it's not the entire solution. I forgot to add that you also determine fees by checking every 2016 blocks what the average fees per block were. Now miners can't manipulate the fee anymore because they don't know who will find the next block, well unless they unanimously decided to insert fees enough to raise the limit, something really hard to achieve since if just one big miner doesn't agree the rest would be paying him to raise the limit.

It can still be gamed upwards. A miner can mine a block with a transaction paying 1000BTC in fees without relaying the txn. If he mines the next block, he pushes up the average, else he doesnt lose anything.

As has been pointed out, there are disadvantages to both extremes.

The primary cost of mining should be hashing power, not bandwidth/storage costs in a datacenter.
In the ideal situation, the gross mining income with an ASIC should not change regardless of whether it is run on a home connection or a datacenter.
Fees are primarily paid for hashing power to secure the network, not for processing/verification, a single low end smartphone could do that. Once you start requiring a Google datacenter to even enter the mining industry due to gigabyte blocks, you have lost control of your currency to a few, but you will have far higher transaction rates and low cost transactions. What is to prevent this large miner from not charging what Visa does? The barrier to entry has become so high that competing would be a very risky proposition.

Don't get me wrong, decentralisation is expensive, very expensive. Bitcoin in its current form vastly more inefficient and expensive than centralised systems like paypal/Visa due to the need for redundancy in storing/processing/verifying.

The question boils down to what level of mining centralisation are we looking for to drive down fees and increase maximum transaction rates.

We need to find a middle ground which supports as many transactions as possible while ensuring that independent hashing(decentralization) remains viable.

[gmaxwell]

It's not wrong, because it's not the entire solution. I forgot to add that you also determine fees by checking every 2016 blocks what the average fees per block were. Now miners can't manipulate the fee anymore because they don't know who will find the next block, well unless they unanimously decided to insert fees enough to raise the limit, something really hard to achieve since if just one big miner doesn't agree the rest would be paying him to raise the limit.

Is this software design by debate?  Am I the design oracle which will only tell you when a design is no good, so you search for the solution by suggesting all the things which are not the solution?

Think a little harder on this. This fails because its costless and obviously in all miners interest to mine fake fees. Fees are paid to this block, not the next block, miners would pay fees to themselves and skew up the average. Your revised proposal is isomorphic to straight up having miners vote on it, which fails for all the previously discussed reasons.

I don't like this idea because I don't think enough fees would be collected to provide for adequate security. What if hashpower becomes so easy to increase that the relationship you set as a rule for block size limit being raised doesn't even beging to cover anything?

I don't like it much either, but not for those reasons... What was suggested there is proportional and limits the increase to be strictly less. Breakthroughs in the energy efficiency of POW will also result in increases in efficiency of verification (except perhaps POW ease due to a huge SHA256 break, but in that case we must hardfork to remove SHA256 from the merkle root).

I said it's retarded to suggest it in Mikes scenario when there is no(or close to no) income. There are better ways to heat than to run a miner on a loss.

Okay, I missed that condition.

[420]

It's not wrong, because it's not the entire solution. I forgot to add that you also determine fees by checking every 2016 blocks what the average fees per block were. Now miners can't manipulate the fee anymore because they don't know who will find the next block, well unless they unanimously decided to insert fees enough to raise the limit, something really hard to achieve since if just one big miner doesn't agree the rest would be paying him to raise the limit.

It can still be gamed upwards. A miner can mine a block with a transaction paying 1000BTC in fees without relaying the txn. If he mines the next block, he pushes up the average, else he doesnt lose anything.

As has been pointed out, there are disadvantages to both extremes.

The primary cost of mining should be hashing power, not bandwidth/storage costs in a datacenter.
In the ideal situation, the gross mining income with an ASIC should not change regardless of whether it is run on a home connection or a datacenter.
Fees are primarily paid for hashing power to secure the network, not for processing/verification, a single low end smartphone could do that. Once you start requiring a Google datacenter to even enter the mining industry due to gigabyte blocks, you have lost control of your currency to a few, but you will have far higher transaction rates and low cost transactions. What is to prevent this large miner from not charging what Visa does? The barrier to entry has become so high that competing would be a very risky proposition.

Don't get me wrong, decentralisation is expensive, very expensive. Bitcoin in its current form vastly more inefficient and expensive than centralised systems like paypal/Visa due to the need for redundancy in storing/processing/verifying.

The question boils down to what level of mining centralisation are we looking for to drive down fees and increase maximum transaction rates.

We need to find a middle ground which supports as many transactions as possible while ensuring that independent hashing(decentralization) remains viable.

uh how is it more expensive................are you saying because the pool controls little miners?

a $600 ASIC is about the same cost as 3x regular GPU's previously bought for mining

[johnyj]

BTC Guild started setting up a new server this morning running modified block rules.  Currently trying out a 500,000 byte maxblocksize.  The problem is with larger blocks, you increase the chance of orphans since it will take at least twice as long to propagate, if not more.  I've modified the fee settings to prefer fee based transactions when increasing the block size past 50 KB, so hopefully the increase in fees per block offset the orphan rate increase.

The old settings were default, with the 250,000 byte limit, 27k for high-priority (regardless of fee).  The new settings we're trying (subject to change, and not on all servers yet) is 500kB block max size, no reserved space for no-fee transactions with high priority, and a minimum size set to 50 kB to grab high priority/no-fee transactions if there aren't that many unconfirmed paid transactions.

I do not really understand why did you change the soft limit on max blocksize? The purpose of this limit is to simulate what will happen when a hard limit is hit, do you already forced to lift the soft limit due to some severe problem?

[johnyj]

By default Bitcoin will not created blocks larger than 250kb even though it could do so without a hard fork. We have now reached this limit. Transactions are stacking up in the memory pool and not getting cleared fast enough.

What this means is, you need to take a decision and do one of these things:

• Start your node with the -blockmaxsize flag set to something higher than 250kb, for example -blockmaxsize=1023000. This will mean you create larger blocks that confirm more transactions. You can also adjust the size of the area in your blocks that is reserved for free transactions with the -blockprioritysize flag.
• Change your nodes code to de-prioritize or ignore transactions you don't care about, for example, Luke-Jr excludes SatoshiDice transactions which makes way for other users.
• Do nothing.

If everyone does nothing, then people will start having to attach higher and higher fees to get into blocks until Bitcoin fees end up being uncompetitive with competing services like PayPal.

If you mine on a pool, ask your pool operator what their policy will be on this, and if you don't like it, switch to a different pool.

I suggest that all the pools and miners take this chance and DO NOTHING, and we will see if bitcoin really end up being driven out by PayPal 

I think they are totally two different network and surve different purpose. I use paypal mainly because I want to spend inflative fiat money as quick as possible, and it can guarantee a charge back and give me invoice. But bitcoin just can't do that no matter how low the fee is. Bitcoin protect merchant but not consumer, so it will not be used by mass scale of consumers, maybe mostly gamblers 

[Nagato]

It's not wrong, because it's not the entire solution. I forgot to add that you also determine fees by checking every 2016 blocks what the average fees per block were. Now miners can't manipulate the fee anymore because they don't know who will find the next block, well unless they unanimously decided to insert fees enough to raise the limit, something really hard to achieve since if just one big miner doesn't agree the rest would be paying him to raise the limit.

It can still be gamed upwards. A miner can mine a block with a transaction paying 1000BTC in fees without relaying the txn. If he mines the next block, he pushes up the average, else he doesnt lose anything.

As has been pointed out, there are disadvantages to both extremes.

The primary cost of mining should be hashing power, not bandwidth/storage costs in a datacenter.
In the ideal situation, the gross mining income with an ASIC should not change regardless of whether it is run on a home connection or a datacenter.
Fees are primarily paid for hashing power to secure the network, not for processing/verification, a single low end smartphone could do that. Once you start requiring a Google datacenter to even enter the mining industry due to gigabyte blocks, you have lost control of your currency to a few, but you will have far higher transaction rates and low cost transactions. What is to prevent this large miner from not charging what Visa does? The barrier to entry has become so high that competing would be a very risky proposition.

Don't get me wrong, decentralisation is expensive, very expensive. Bitcoin in its current form vastly more inefficient and expensive than centralised systems like paypal/Visa due to the need for redundancy in storing/processing/verifying.

The question boils down to what level of mining centralisation are we looking for to drive down fees and increase maximum transaction rates.

We need to find a middle ground which supports as many transactions as possible while ensuring that independent hashing(decentralization) remains viable.

uh how is it more expensive................are you saying because the pool controls little miners?

a $600 ASIC is about the same cost as 3x regular GPU's previously bought for mining

I assume you mean how Bitcoin is more expensive.

You have to understand that any full node, could be your home PC, can alone process/mine/verify all bitcoin traffic today singlehandedly. It does not matter if every other miner out there disappeared, the bitcoin network will still function as smoothly as it did.

Every other Full node, be it a miner or full client, is redundant and incurs a cost to the economy in hardware/bandwidth costs. If there are 100k people running full nodes, the cost of the Bitcoin network is ~100k times more expensive than Paypal/Visa(Just goes to show how much money they actually make without competition). What these redundant nodes provide is dencentralisation and in the case of miners, hashing power to secure the network.

[hazek]

It's not wrong, because it's not the entire solution. I forgot to add that you also determine fees by checking every 2016 blocks what the average fees per block were. Now miners can't manipulate the fee anymore because they don't know who will find the next block, well unless they unanimously decided to insert fees enough to raise the limit, something really hard to achieve since if just one big miner doesn't agree the rest would be paying him to raise the limit.

Is this software design by debate?  Am I the design oracle which will only tell you when a design is no good, so you search for the solution by suggesting all the things which are not the solution?

Think a little harder on this. This fails because its costless and obviously in all miners interest to mine fake fees. Fees are paid to this block, not the next block, miners would pay fees to themselves and skew up the average. Your revised proposal is isomorphic to straight up having miners vote on it, which fails for all the previously discussed reasons.

Yeah.. nvm me, a non dev noob.  I thought about it a bit more after I went to bed last night and it occurred to me what you're saying I just wasn't sure if a miner can add a tx with some outrages fee that he doesn't need to broadcast while "looking" for a block. If he doesn't 1 miner alone could skew the average above that limit.


Well good luck to Bitcoin and all of us because I now really think we're going to need it if we are to find a solution that will scale and will provide the right incentives.

[TheButterZone]

tl&tc;cu
So is this the beginning of the end of Bitcoin, or can the blockchain abuse+bloat be fixed without 1) locking all devs and miners in a room and saying "fix this if you want to get out" or 2) further kissing the jackboots of tyranny and requesting they shut down SD & copycats in exchange for brutal taxation?

Can even Satoshi himself fix this?

[Jutarul]

tl&tc;cu
So is this the beginning of the end of Bitcoin, or can the blockchain abuse+bloat be fixed without 1) locking all devs and miners in a room and saying "fix this if you want to get out" or 2) further kissing the jackboots of tyranny and requesting they shut down SD & copycats in exchange for brutal taxation?

Can even Satoshi himself fix this?

no worries. transaction fee requirements will restore the equilibrium. The only thing which may get slowed down is the adoption rate, because suddenly bitcoin transactions cost real money.

[TheButterZone]

tl&tc;cu
So is this the beginning of the end of Bitcoin, or can the blockchain abuse+bloat be fixed without 1) locking all devs and miners in a room and saying "fix this if you want to get out" or 2) further kissing the jackboots of tyranny and requesting they shut down SD & copycats in exchange for brutal taxation?

Can even Satoshi himself fix this?

no worries. transaction fee requirements will restore the equilibrium. The only thing which may get slowed down is the adoption rate, because suddenly bitcoin transactions cost real money.

"Nearly free" is far better than a vague "cheaper than credit cards" (real money). The TX fee requirements need to be kept to "nearly free", otherwise the status quo of shitty global finance is here to stay and Bitcoin might as well be resigned to the kid's lemonade stand next to a Jamba Juice, forever.

[Nagato]

Id just like to add on that given today's network speeds, a 10MB block size(eqv to Paypal txn rates) is doable and would still maintain relatively high levels of mining decentralization(miners would require something like a 30Mbps u/d connection to keep average download/upload times to 1% of mining time). It would drive many small miners out, possibly shrinking p2ppool, migration of most miners to pools which have a node in a datacenter. But it wont be to the point that you would need a large corporation or VC funding to run a mining node. Anyone paying a few hundred dollars/month could host a mining node in a datacenter or subscribe to a faster internet connection.

But i don't think that we will need anywhere near that size for many many years to come. The reason is that i simply do not see blockchain txns being viable as a POS solution. For physical stores, im not going to buy a laptop and wait around 30mins for 3 confirmations before the store owner is sure that im not double spending. Even for low cost items, cash is just better suited than a blockchain txn(waiting ~10mins to confirm so i can purchase a drink). Note i said blockchain txn, off blockchain methods like a pre-paid bitcoin card/service or physical bitcoin coins/notes are instant and cheaper.

As for online transactions, Paypal/Visa/Mastercard are not collapsing overnight. It is very likely that they will reduce fees/cut costs once Bitcoin starts to take their market share. And they can theoretically always be cheaper than Bitcoin due to a more efficient centralized system. If Bitcoin provides competition and forces them to become competitive, it is a victory for everyone. Even if fiat collapses, with Bitcoin being an open system, there is no limit to the number of payment processors that can spring up and provide instant off-chain txns for small amounts. This is not the case with the fiat world, even Google/Paypal have to rely on the Visa/Mastercard to process fiat txns allowing the 2 to have huge margins for negligible cost.

[drawingthesun]

Does Litecoin have the same block size problem?

Doesn't Litecoin create blocks 4 times faster than Bitcoin? Meaning the blockchain for Litecoin will grow at 4 times the speed. Don't take my word for it i'm probably wrong.

[Daily Anarchist]

How to raise the most amount of fees is really an interesting question.

The need to raise enough fees to incentivize enough miners to protect the network is clear. The question then is, do we raise more fees by restricting the number of transactions and bidding up the cost of each transaction, or by opening up the the number of transactions to near limitless and thus having more, but smaller fees per transaction?

It's sort of like the long debated question by politicians. Do they generate more revenue by raising taxes or lowering them?

I'm sure the answer is something similar to a bell curve.

As gmaxwell alluded to earlier, being stuck at the current limit isn't the answer, and neither is allowing infinite block sizes. There needs to be an algorithm that equitably adjusts the rate of increase of block sizes. I think that would be a much more worthwhile debate than banging our heads against the wall worrying about what constitutes spam and what doesn't.

[Jutarul]

How to raise the most amount of fees is really an interesting question.

The need to raise enough fees to incentivize enough miners to protect the network is clear. The question then is, do we raise more fees by restricting the number of transactions and bidding up the cost of each transaction, or by opening up the the number of transactions to near limitless and thus having more, but smaller fees per transaction?

It's sort of like the long debated question by politicians. Do they generate more revenue by raising taxes or lowering them?

I'm sure the answer is something similar to a bell curve.

As gmaxwell alluded to earlier, being stuck at the current limit isn't the answer, and neither is allowing infinite block sizes. There needs to be an algorithm that equitably adjusts the rate of increase of block sizes. I think that would be a much more worthwhile debate than banging our heads against the wall worrying about what constitutes spam and what doesn't.

Actually it's pretty simple. Adjust the block size to allow for a steady 10% bandwidth use of the average broadband speed across all major countries: http://www.netindex.com/download/allcountries/
Which right now would be about 1Mbit/s, which approximately translates into 100MB blocks.

[btcven]

As long as Satoshi Dice's transactions are following the rules, that's all that matters to me. I don't care what the purpose the transactions are for. Not my business.

SatoshiDice does not follow the rules:
The blockchain is a system for transferring value, of which the final total is specified in advance. Those are the terms of the social contract every Bitcoin holder has adopted understanding. Those are the terms every node has agreed to voluntarily participate in the network.
Nodes and miners have not unanimously agreed to have their resources/time spent inefficently processing informational messages like "you lose", "you win", or even "I bet on <this> game with <this> much". This was never part of the agreement.
Nor is the system supposed to hold up to flooding. If you go back to even the original paper by Satoshi, miners are expected to filter out flooding attacks like this. The proposed transaction fee solution works in most cases, but not SatoshiDice because they have social-engineered gamblers into covering the fees for them, and to make it worse the gamblers are willing to pay a higher fee than real users. If Bitcoin had achieved critical mass already, we might have been able to just say "too bad, deal with higher fees", but at this pre-adoption stage the response to that would almost certainly be "screw you, I'll stick with VISA".

Note this isn't really a problem if miners are responsible and filter out the SatoshiDice flooding.
My git repository contains a "block_dice" branch to do just that.
The 0.8.0.eligius branch designed specifically for miners and pools also includes this.
Gavin also wrote up some more advanced configuration option examples here.

Yes, this is a problem because 50% of TXes would never confirm.

No, filtering out flooding attacks responsibly improves confirmation time of transactions.

Why SDice and any other gambling site just use a user balance system and let them play like in a casino where you can withdraw your entire balance if you need cash

[Akka]

How to raise the most amount of fees is really an interesting question.

The need to raise enough fees to incentivize enough miners to protect the network is clear. The question then is, do we raise more fees by restricting the number of transactions and bidding up the cost of each transaction, or by opening up the the number of transactions to near limitless and thus having more, but smaller fees per transaction?

It's sort of like the long debated question by politicians. Do they generate more revenue by raising taxes or lowering them?

I'm sure the answer is something similar to a bell curve.

As gmaxwell alluded to earlier, being stuck at the current limit isn't the answer, and neither is allowing infinite block sizes. There needs to be an algorithm that equitably adjusts the rate of increase of block sizes. I think that would be a much more worthwhile debate than banging our heads against the wall worrying about what constitutes spam and what doesn't.

Actually it's pretty simple. Adjust the block size to allow for a steady 10% bandwidth use of the average broadband speed across all major countries: http://www.netindex.com/download/allcountries/
Which right now would be about 1Mbit/s, which approximately translates into 100MB blocks.

So simply add to the Protocol that it only accepts blocks it downloads in <= 1 Minute, maybe add it also starts accepting them if it falls more than 10 Blocks (or so) behind to allow below average nodes to still participate.

The only problem I see here, is that pools are probably better connected than the average node and could increase the bandwidth requirements.

But other than that, such a solution would allow Bitcoin to always use the actual state of technology, no matter where it develops.

[Nagato]

How to raise the most amount of fees is really an interesting question.

The need to raise enough fees to incentivize enough miners to protect the network is clear. The question then is, do we raise more fees by restricting the number of transactions and bidding up the cost of each transaction, or by opening up the the number of transactions to near limitless and thus having more, but smaller fees per transaction?

It's sort of like the long debated question by politicians. Do they generate more revenue by raising taxes or lowering them?

I'm sure the answer is something similar to a bell curve.

As gmaxwell alluded to earlier, being stuck at the current limit isn't the answer, and neither is allowing infinite block sizes. There needs to be an algorithm that equitably adjusts the rate of increase of block sizes. I think that would be a much more worthwhile debate than banging our heads against the wall worrying about what constitutes spam and what doesn't.

Actually it's pretty simple. Adjust the block size to allow for a steady 10% bandwidth use of the average broadband speed across all major countries: http://www.netindex.com/download/allcountries/
Which right now would be about 1Mbit/s, which approximately translates into 100MB blocks.

A 1Mbps connection is barely viable for mining 1MB blocks. You would spend >3% of your time downloading/uploading blocks. At 30MB blocks, you will spend ~100% of your time downloading and uploading your block, forget mining.

To mine, you want to keep your time waste in block propogation to a minimum. If you are aiming for <1%, you need to be able to download and upload blocks within 6s.

[muyuu]

tl&tc;cu
So is this the beginning of the end of Bitcoin, or can the blockchain abuse+bloat be fixed without 1) locking all devs and miners in a room and saying "fix this if you want to get out" or 2) further kissing the jackboots of tyranny and requesting they shut down SD & copycats in exchange for brutal taxation?

Can even Satoshi himself fix this?

no worries. transaction fee requirements will restore the equilibrium. The only thing which may get slowed down is the adoption rate, because suddenly bitcoin transactions cost real money.

No doubt about that. There will be an equilibrium, but that equilibrium may be achieved by having fewer users and some casualties along the way (lost transactions, hit to credibility, etc).

Allowing the bloat rate to double by doubling the block size is another form of "equilibrium" - although a temporary one - and so is having some sort of Bitcoin war with miners arbitrarily prioritising some TXs over others. And posting in the forums to rally their criteria.

There are merits to all of them.

As I posted before, increasing block size sounds to me like the worst idea. As a temporary fix, blocking SD makes more sense since adoption is a priority (allowing free TXs for some more time can be considered a form of adoption subsidy). This is where I agree with Luke.

What I disagree with, is relying on a "social contract" for the very viability of the system long term. The very base of Bitcoin is that transactions cannot rely on trust.

[Mike Hearn]

lol @ Ian's comment.

Anyway, I'll just point out that mining generates three things that are beneficial:

1) Mining revenue (inflation+fees)
2) Heat
3) Network security

Assume revenue drops to zero. This won't happen until we're all dead, but OK, let's think about it anyway.

It is still better to use mining hardware for heat rather than just resistance coils, because confirmations are a useful thing. Somebody, somewhere, will find a way to pay for that. Some random ideas:

 - Exchanges giving out free mining hardware to elderly people
 - Companies that rely on irreversible transactions heating their offices with mining hardware
 - Insurance companies that secure transactions on the behalf of other companies selling the waste heat to swimming pool complexes or shopping malls

It's basic capitalism - it's an activity that benefits all kinds of people, so it'll get funded one way or another.  Now whether that is by attaching fees to every tx (as Satoshi felt might be one day needed), or network assurance contracts, or simply finding ways to profit off the waste heat ... this is an interesting academic debate but as I said, inflation only drops to zero after our bones have all turned to dust. There's plenty of time to sit back and see what happens.

[Gabit]

As I posted before, increasing block size sounds to me like the worst idea. As a temporary fix, blocking SD makes more sense since adoption is a priority (allowing free TXs for some more time can be considered a form of adoption subsidy). This is where I agree with Luke.

Instead blaming userland (and start cherry picking), we should accommodate it. We are now peaking at 70K transactions/day, and it is practically nothing, compared where it should scale (1500x) at minimum.

http://www.mail-archive.com/cryptography@metzdowd.com/msg09964.html

"
The bandwidth might not be as prohibitive as you think.  A typical transaction
would be about 400 bytes (ECC is nicely compact).  Each transaction has to be
broadcast twice, so lets say 1KB per transaction.  Visa processed 37 billion
transactions in FY2008, or an average of 100 million transactions per day. 
That many transactions would take 100GB of bandwidth, or the size of 12 DVD or
2 HD quality movies, or about $18 worth of bandwidth at current prices.

Satoshi Nakamoto
"

[hazek]

Just wow Mike. 

[Nagato]

Just wow Mike. 

That's a nice way to put it

[muyuu]

As I posted before, increasing block size sounds to me like the worst idea. As a temporary fix, blocking SD makes more sense since adoption is a priority (allowing free TXs for some more time can be considered a form of adoption subsidy). This is where I agree with Luke.

Instead blaming userland (and start cherry picking), we should accommodate it. We are now peaking at 70K transactions/day, and it is practically nothing, compared where it should scale (1500x) at minimum.

http://www.mail-archive.com/cryptography@metzdowd.com/msg09964.html

"
The bandwidth might not be as prohibitive as you think.  A typical transaction
would be about 400 bytes (ECC is nicely compact).  Each transaction has to be
broadcast twice, so lets say 1KB per transaction.  Visa processed 37 billion
transactions in FY2008, or an average of 100 million transactions per day.  
That many transactions would take 100GB of bandwidth, or the size of 12 DVD or
2 HD quality movies, or about $18 worth of bandwidth at current prices.

Satoshi Nakamoto
"

We need more time to increase the system's performance. That's the problem at hand.

Also, in the future we might be doing the vast majority of the transactions outside of the blockchain. Right now an important chunk of BTC transactions are done internally at exchanges, not hitting the blockchain at all. There's the Bitcoin + Ripple symbiosis idea too.

Enforcing the acceptance of totally free transactions makes for a system that won't scale. There's no two ways about that. Visa would likely process an order of magnitude more transactions if they were free. That just doesn't fly. Also, Visa's systems don't need to keep a globally distributed record of all transactions growing over time.

[Mageant]

Does Litecoin have the same block size problem?

Doesn't Litecoin create blocks 4 times faster than Bitcoin? Meaning the blockchain for Litecoin will grow at 4 times the speed. Don't take my word for it i'm probably wrong.

No, because that does not mean 4 times the transactions. Although there is a slightly larger overhead due to the higher number of blocks.

Actually Litecoin could take about 4 times the amount of transactions since the blocksize limit applies to each block but you have 4 times the number of blocks.

So the maximum that Bitcoin could do in 10 minutes is 1 MB whereas Litecoin could do 4 MB in those same 10 minutes.

I think that if size really becomes a problem for Bitcoin blocks and thus transactions fees rise because of that, then Litecoin could take over the role of handling the microtransactions.

[Nagato]

It's basic capitalism - it's an activity that benefits all kinds of people, so it'll get funded one way or another. 

Sufficient nutrition for every human to end starvation. Hasn't happened yet.
Free internet and electricity for everyone. Hasn't happened yet.
Free money every month so that we all can quit our jobs and spend time on leisure.
All activities that benefits all kinds of people, so it'll get funded one way or another. 

Sorry to bring it up this way but either capitalism has failed or your definition of capitalism is skewed.

[Mike Hearn]

Sufficient nutrition for every human to end starvation. Hasn't happened yet.

It has actually. The world produces a surplus of food (see the notorious EU "cheese mountains and wine lakes").

People still starve, but that's usually due to political problems (food can't get to where it's needed), not because we don't know how to feed everyone.

Free internet and electricity for everyone. Hasn't happened yet.

Really? I get free internet every time I go to Starbucks. Of course it's not really "free", it is paid for out of the price of my cup of tea, but then again I'm not saying mining will cost nothing, I'm saying it will get paid for one way or another, and those costs will eventually get passed on to all system participants .... possibly without using the fee mechanism. Obviously if some exchange provides the local community with heat, the cost of that mining still exists, it just gets added onto exchange fees or something similar.

Or we might all end up attaching fees to transactions. Who can even tell what happens six months from now, let alone decades.

[zebedee]

Does Litecoin have the same block size problem?

Doesn't Litecoin create blocks 4 times faster than Bitcoin? Meaning the blockchain for Litecoin will grow at 4 times the speed. Don't take my word for it i'm probably wrong.

No, because that does not mean 4 times the transactions. Although there is a slightly larger overhead due to the higher number of blocks.

Actually Litecoin could take about 4 times the amount of transactions since the blocksize limit applies to each block but you have 4 times the number of blocks.

So the maximum that Bitcoin could do in 10 minutes is 1 MB whereas Litecoin could do 4 MB in those same 10 minutes.

I think that if size really becomes a problem for Bitcoin blocks and thus transactions fees rise because of that, then Litecoin could take over the role of handling the microtransactions.

Unless I'm misunderstanding you, this makes no sense.  You're postulating bitcoin hasn't solved the size problem, but litecoin has?  They use the same method.  One produces blocks at a different rate.  But since this discussion is all about whether total fees will cover the total cost of securing the network, there is absolutely no difference between either, the different rate is a mirage as it cancels out.

[Rothgar]

I dont think what SD does is good, but blocking addresses isnt really in the spirit of bitcoin 

I'd welcome a better solution myself, but I haven't been able to think up something that works without screwing up Bitcoin adoption at the same time.

Maybe break a block into three pieces.  50 kB free/high priority, 200 kB fee paying transactions excluding SD  50 kB fee paying including SD.  

Then the dice users would feel pressure to pay a fee.  While the non dice transactions feel little effect from the SD strain.  There are other options.  Maybe SD transactions that pay double could be included in the middle part of the block.  

Sdice could also change its business model so that users send bitcoins gamble, then withdraw when done.  

[zebedee]

Just wow Mike. 

hazek I don't understand you here.  I normally agree with the vast majority of what you say.  You're very pro free-market and normally rational. 

But on this one issue you seem to think it needs to be solved by wise men rather than market prices.  Why the lack of faith on this one issue?  No I don't believe there is a tragedy of the commons here.

[Monster Tent]

If you start blocking any particular service bitcoin is as good as dead. The bad pr alone will kill it.

[muyuu]

But since this discussion is all about whether total fees will cover the total cost of securing the network, there is absolutely no difference between either, the different rate is a mirage as it cancels out.

This discussion is partly about that, but mainly about actual time frames. Thanks to Satoshidice we are at a point in number of transactions that we thought we'd reach much later, so we have no time to develop something sophisticated to deal with it.

This thread is mostly about kicking the can down the road so we have more time to deal with this problem.

So yeah, a faster block rate equates to increasing the block size. It's a possible alternative to increasing arbitrarily the hard block limit (reducing arbitrarily block time).

[hazek]

Just wow Mike.  

hazek I don't understand you here.  I normally agree with the vast majority of what you say.  You're very pro free-market and normally rational.  

But on this one issue you seem to think it needs to be solved by wise men rather than market prices.  Why the lack of faith on this one issue?  No I don't believe there is a tragedy of the commons here.

Because I don't want the security of Bitcoin to fall victim to the tragedy of the commons or get centralized between a few super nodes. And if that is the path the market will take Bitcoin on, I will unfortunately need to move to on to better things.

[Nagato]

It has actually. The world produces a surplus of food (see the notorious EU "cheese mountains and wine lakes").

People still starve, but that's usually due to political problems (food can't get to where it's needed), not because we don't know how to feed everyone.

Which is exactly what im trying to explain. This is ultimately capitalism at work.
Products/services don't go to where it's needed, they go where there is the greatest profit to be made.
Capitalism, for all it's advantages, is brutal to the weak and unfortunate.
That is the law of the jungle and nature and its the system that has brought the greatest benefit to all of mankind.

It does not matter how much surplus is produced, if you can't pay, you don't get it.
The problem is not that there is surplus food that is not given away free or below cost,
the problem is that there are too many people who are not able to earn a living, often because of political corruption/stupidity,partly because of overpopulation and partly because technology/automation has made most manual labour obsolete.

I assume you support unemployment benefits, foodstamps and minimum wage laws.
Since they benefit the less fortunate and are getting funded somehow.
Perhaps you don't realise that the "funding" is coming from higher inflation/taxes.

This whole idea of somebody will pay for it is not sustainable. Im not saying that charity does not occur, it does, but it does not scale and is not reliable.
Why should anyone work for nothing in return? Because it's noble? Cool, ill do the receiving and the noble people can do the work.

[Raoul Duke]

By default Bitcoin will not created blocks larger than 250kb even though it could do so without a hard fork. We have now reached this limit. Transactions are stacking up in the memory pool and not getting cleared fast enough.

What this means is, you need to take a decision and do one of these things:

• Start your node with the -blockmaxsize flag set to something higher than 250kb, for example -blockmaxsize=1023000. This will mean you create larger blocks that confirm more transactions. You can also adjust the size of the area in your blocks that is reserved for free transactions with the -blockprioritysize flag.
• Change your nodes code to de-prioritize or ignore transactions you don't care about, for example, Luke-Jr excludes SatoshiDice transactions which makes way for other users.
• Do nothing.

If everyone does nothing, then people will start having to attach higher and higher fees to get into blocks until Bitcoin fees end up being uncompetitive with competing services like PayPal.

If you mine on a pool, ask your pool operator what their policy will be on this, and if you don't like it, switch to a different pool.

I suggest that all the pools and miners take this chance and DO NOTHING, and we will see if bitcoin really end up being driven out by PayPal 

I think they are totally two different network and surve different purpose. I use paypal mainly because I want to spend inflative fiat money as quick as possible, and it can guarantee a charge back and give me invoice. But bitcoin just can't do that no matter how low the fee is. Bitcoin protect merchant but not consumer, so it will not be used by mass scale of consumers, maybe mostly gamblers 

Paypal invoices you for things merchants sell? Kind of hard to believe

Merchants are the ones who must invoice you, not the payment processors. Even if you pay with bitcoin the merchant must give you the invoice with the value in whatever is legal tender in his country.

[Jutarul]

If you start blocking any particular service bitcoin is as good as dead. The bad pr alone will kill it.

You have to distinguish between a) filtering transactions which are included in a valid block (and thus potentially discarding them, causing forks) and b) filtering transactions as you mine.

The discussion is about b), i.e. bullying particular transaction types at the stage of propagation for the sake of some greater good.

As long as a) doesn't happen, it really depends on the mining landscape and the policy of individual miners which transaction types have an easier time to get through. And that's good - that's democracy. Miners should be allowed to do whatever they want, as long as it satisfies the minimal rules.