Soft block size limit reached, action required by YOU

[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.

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[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?