Miner-originated transactions bypassing the queue?

[matt4054]

While investigating my chart anomaly on www.bitcoinqueue.com I noticed that some zero-fee transactions were included directly into blocks, without "waiting" in the transaction pool first. I have seen two recent occurrences on the following chart:



Of course, by protocol, miners are allowed to do so (because they can). But eventually, this could lead to a "parallel market" of the confirmation process, where you pay directly (or indirectly) a pool to include your (possibly zero-fee) transactions into the next block that they mine, bypassing the original (Bitcoin Core) block constitution, fee-based algorithm.

What do you think?

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[Quantus]

lol So you think people will pay mining pools so they don't have to pay mining pools? That stupid.
Mining pools don't know when they will find another block. Depending on the size of the pool they could go days without finding a block.
Why would this arraignment be any more profitable for the mining pool?

[matt4054]

lol So you think people will pay mining pools so they don't have to pay transaction fees? That stupid.

That's not what I said.

But it shows that the "parallel channel" of peer-to-peer brokerage with pools could be used. Although it should be in equilibrium economically speaking (as you said, pools would be stupid to include zero-fee tx when they could reap fees the usual way), there could be scenarios where the fee would be paid indirectly or otherwise dealt directly with the pool.

[Quantus]

lol So you think people will pay mining pools so they don't have to pay transaction fees? That stupid.

That's not what I said.

But it shows that the "parallel channel" of peer-to-peer brokerage with pools could be used. Although it should be in equilibrium economically speaking (as you said, pools would be stupid to include zero-fee tx when they could reap fees the usual way), there could be scenarios where the fee would be paid indirectly or otherwise dealt directly with the pool.

lol are you high?

[matt4054]

lol are you high?

No, would you care to elaborate a little bit?

Haven't you ever seen "zero fees" pools that were subsidising 0% fee PPS for other goals? Just an example...

[Quantus]

Your talking about some kind subscription?

Like if I wanted to send lots of transactions I could cut a deal with <large mining pool> so all my transactions are processed threw them and they give me a discount?

[matt4054]

Yes, you're getting my point. And/but it doesn't necessarily has to be a discount.

Imagine that I'm ACME-BTC Corp. and that I need to send huge transactions (many outputs, typically) on a regular, predictable basis. I could imagine dealing directly with a major pool to negotiate a fee "contract" over a period of time, where tx fees are fixed (vs. fluctuant on the primary fee market) and the pool guarantees inclusion of my transactions in its mined blocks.

This would be especially useful in times of block congestion (i.e. like on Friday... )

[Quantus]

Even a large mining pool would not be able to deliver a reliable service. We would have to assume their was enough space for these spam like transactions in the first place otherwise other transactions would pay more. But if their is room then the sender/transmitter could just pay a low fee and get accepted by other pools. Any mining pool behaving in this manner would be seen as a threat by the network and DDosed into oblivion. The incentive to "play by the rules" prevent this type of action.  

But yes one of the perks of owning a large pool is that you get to make free transactions that's what your looking at in the OP. A pool owner or operator sending out shares to its members at 0 cost.


But yes If I needed to send bitcoins at a moments notice at a unknowable time in the future and wanted to protect myself from possible network congestion maybe a insurance contract with a mining pool might be possible.


"A Bitcoin payment insurance plan. Pay X amount of bitcoins now and we guarantee your payment will be processed free of charge regardless of network congestion."

Yes... I guess its possible but its a really fringe situation. Not many people would be willing to pay for such protection.

[Holliday]

OP, fees paid to mining pools directly (as opposed to including the fee with the transaction) are typically referred to as "out of band".

I'm not sure what Quantus is on about, but there are plenty of reasons that a party might want to pay their transaction fees out-of-band and I fully expect the practice to be commonplace in the future (if it isn't already happening now, as you've suggested).

[Quantus]

yea I'm high as fuck, I'm go back to playing Minecraft.


Wait now I want to know. What are the reasons for these out of band payments?
Do fees add to the size of a transaction? This would be good for the blockchain! oh shit! A large company could help reduce the size of blocks if they setted all transaction fees at the end of each day in one payment. 

[Cuidler]

Wait now I want to know. What are the reasons for these out of band payments?
Do fees add to the size of a transaction? This would be good for the blockchain! oh shit! A large company could help reduce the size of blocks if they setted all transaction fees at the end of each day in one payment.

The fee does not add to transaction size at all, even block size is the same as miner claim all fees directly in the coinbase.

These free transactions might be pool payments to its miners. And anyway its the miners who decide what (if any) transactions to add, or their fee policy. I see already some mining pools have set minimum satoshi / byte to even consider adding transaction to 5 or 10, no matter whether blocks are almost empty - thats a good policy and shows there is no need to worry about bigger than 1 MB blocks, as miners have incentives to not fill up the blocks with spam, and the bigger blocks can help more users to have fast confirmation if they pay fee higher than is minimum mining pool satoshi / byte treshold.

[smoothie]

While investigating my chart anomaly on www.bitcoinqueue.com I noticed that some zero-fee transactions were included directly into blocks, without "waiting" in the transaction pool first. I have seen two recent occurrences on the following chart:



Of course, by protocol, miners are allowed to do so (because they can). But eventually, this could lead to a "parallel market" of the confirmation process, where you pay directly (or indirectly) a pool to include your (possibly zero-fee) transactions into the next block that they mine, bypassing the original (Bitcoin Core) block constitution, fee-based algorithm.

What do you think?

Perhaps this could be the miner that mined those blocks are the same person initiating the transaction.

I mean if you create a block then you could in theory include and exclude what transactions you wish.

[aliashraf]

While investigating my chart anomaly on www.bitcoinqueue.com I noticed that some zero-fee transactions were included directly into blocks, without "waiting" in the transaction pool first. I have seen two recent occurrences on the following chart:

Of course, by protocol, miners are allowed to do so (because they can). But eventually, this could lead to a "parallel market" of the confirmation process, where you pay directly (or indirectly) a pool to include your (possibly zero-fee) transactions into the next block that they mine, bypassing the original (Bitcoin Core) block constitution, fee-based algorithm.

What do you think?

I have a description for this phenomenon and if i'm right it is worth studying more deeply

I think it is about SPV mining: Miner is not capable or refuses to verify the latest confirmed block, it simply adds transactions which she 'knows' are not included in the block (zero transactions if she is not sure) seeking the main block reward and the fees (if any). We have a lot of literature out there discussing this.

[franky1]

put it this way, in regards to the possible "subscription", "out of bounds", "future parallel market"

BTCC right now has a "deal" with its customers that use its exchanges and other services. and that deal is...... free transactions AKA "block priority"
http://www.coindesk.com/press-releases/btcc-launches-blockpriority-service/

knowing that BTCC gets a block atleast once an hour. makes their customers relaxed that even without a fee they are going to get their tx into a block within the hour, just because they are BTCC customers. nothing more, nothing less.

[shorena]

put it this way, in regards to the possible "subscription", "out of bounds", "future parallel market"

BTCC right now has a "deal" with its customers that use its exchanges and other services. and that deal is...... free transactions AKA "block priority"
http://www.coindesk.com/press-releases/btcc-launches-blockpriority-service/

knowing that BTCC gets a block atleast once an hour. makes their customers relaxed that even without a fee they are going to get their tx into a block within the hour, just because they are BTCC customers. nothing more, nothing less.

For one this! Its not as absurd an idea as Quantus tries to make it.

@OP do you have any more information on the TX or the pool that found the blocks they got confirmed in? Other than an external deal I can think of a few things that might have cause this. E.g. a very high priority either due to large amounts, old coins or both. Its also possible that a created several TX to fuse a couple of smallish inputs into a single large one.

[DannyHamilton]

I've always assumed that eventually the bulk of transactions that get confirmed by very large pools would have their fees paid out-of-band.

The scenario that seemed most likely to me was that a large merchant (Walmart? McDonald's? Amazon?) would establish a contract to pay out-of-band for confirmation of all transactions sent to any of the merchant's addresses. This way they could get relatively quick confirmation even when customers sent transactions with 0 or low fees.

[aliashraf]

put it this way, in regards to the possible "subscription", "out of bounds", "future parallel market"

BTCC right now has a "deal" with its customers that use its exchanges and other services. and that deal is...... free transactions AKA "block priority"
http://www.coindesk.com/press-releases/btcc-launches-blockpriority-service/

knowing that BTCC gets a block atleast once an hour. makes their customers relaxed that even without a fee they are going to get their tx into a block within the hour, just because they are BTCC customers. nothing more, nothing less.

Exactly. And it is an obvious flaw! see why?
I bet they do SPV and enjoy up to 8% advantage not to verify the blocks:
just include your own transactions in an empty, reward seeking block and go mining tr fees (and more) have already been earned through other services sold!

[pandalion98]

I don't see why they won't do that. Miners can earn extra when striking deals with companies or businesses. Second, they're the miners. They pick what transactions they want to include in the block.

[reee]

BTCC right now has a "deal" with its customers that use its exchanges and other services. and that deal is...... free transactions AKA "block priority"
http://www.coindesk.com/press-releases/btcc-launches-blockpriority-service/

It's this service still active? I went to their site but i didn't find this service.

[matt4054]

It's this service still active? I went to their site but i didn't find this service.

Actually I think it never made it past the press release / announcement. I don't think there is any alternative, at least not advertised.