Soft block size limit reached, action required by YOU

[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.

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[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).