Funding of network security with infinite block sizes

[TierNolan]

OK, so it doesn't work if you pick those particular numbers. How about if doubling the difficulty gave you 4x the space then? Or more?

Maybe, though, if you make it so that you get super-linear reward for linear effort, then everyone will try to make their blocks as large as possible.

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[solex]

OK, so it doesn't work if you pick those particular numbers. How about if doubling the difficulty gave you 4x the space then? Or more?

Maybe, though, if you make it so that you get super-linear reward for linear effort, then everyone will try to make their blocks as large as possible.

Lateral thinking is always welcome, but any change which makes you think "hmm. That could have unintended consequences..." requires a great deal of analysis and prototyping before getting near live.

Maybe an interim solution for an interim situation?

Plan A: simple increase of block size limit based upon median size of recent blocks (or similar approach)
Plan B: optimal block sizing algorithm OR infinite size allowed. Either case with whatever incentives are determined to work.

Have plan A ready for a new release, at least by the time 500KB blocks are common. Plan B can simmer in the background until a version is demonstrably better than the simple plan A implementation. Only then do it.

[Frozenlock]

OK, so it doesn't work if you pick those particular numbers. How about if doubling the difficulty gave you 4x the space then? Or more?

Maybe, though, if you make it so that you get super-linear reward for linear effort, then everyone will try to make their blocks as large as possible.

--> As long as there is users paying the fees for it.

Also, Mike Hearn posted many topics about bitcoin control with blacklisted addresses and tainted coins, all depending upon miners centralization.
This is another reason I would prefer a pressure to keep everything as small as possible.

Suppose we have huge miners imposing themselves 5-10x more difficulties than the minimum required by the network. They will make more money, but at the same time the smaller miners can choose to let go the superfluous transactions (and their fees) in exchange of a higher probability to solve the next block. It's like the pools fee: some are OK with getting less money as long as it's more consistent.

[bitlancr]

OK, so it doesn't work if you pick those particular numbers. How about if doubling the difficulty gave you 4x the space then? Or more?

Maybe, though, if you make it so that you get super-linear reward for linear effort, then everyone will try to make their blocks as large as possible.

--> As long as there is users paying the fees for it.

Also, Mike Hearn posted many topics about bitcoin control with blacklisted addresses and tainted coins, all depending upon miners centralization.
This is another reason I would prefer a pressure to keep everything as small as possible.

Suppose we have huge miners imposing themselves 5-10x more difficulties than the minimum required by the network. They will make more money, but at the same time the smaller miners can choose to let go the superfluous transactions (and their fees) in exchange of a higher probability to solve the next block. It's like the pools fee: some are OK with getting less money as long as it's more consistent.

Exactly. It's the law of diminishing returns - all the best paying transactions will be in the first 1MB.

[acoindr]

Guys we really need some semblance of a solution forming. I have a feeling it will get far more crowded around here soon.

Everyone is buzzing about Bitcoin as its total value tops one billion ...

http://www.cnbc.com/id/100609853

I'm thinking the middle ground between cap and unlimited size (i.e. dynamic cap) is our best hope.

[Peter Todd]

Guys we really need some semblance of a solution forming. I have a feeling it will get far more crowded around here soon.

Note how the recent run-up in price, and in particular the media coverage about it, has been focusing on Bitcoin as a store of value rather than Bitcoin as a payment system. The media has correctly identified what makes Bitcoin truly special, and it's not by being a irrevocable version of PayPal.

We're an order of magnitude away from filling up blocks without crowding out the low-value stuff yet at all, and rudimentary off-chain transaction stuff already exists in multiple forms. At the same time it's clear that FinCEN may in the future decide to regulate mining directly, so the arguments to keep the blocksize small to allow for anonymous mining are clearly valid; even 1MB blocks are a bit marginal with Tor.

[justusranvier]

At the same time it's clear that FinCEN may in the future decide to regulate mining directly, so the arguments to keep the blocksize small to allow for anonymous mining are clearly valid; even 1MB blocks are a bit marginal with Tor.

At worst FinCEN would just drive the pool operators to operate outside the US and business as usual would continue, with US-based pool members routing their connections through VPNs.

[acoindr]

... so the arguments to keep the blocksize small to allow for anonymous mining are clearly valid; even 1MB blocks are a bit marginal with Tor.

Well, that works under my proposed solution, which is a dynamic cap that increases only if there isn't significant objection from the field of miners to an increase. That way as more bandwidth becomes available in the future, even for Tor users, the cap can be raised as opposition to increased size would die down.

[Peter Todd]

... so the arguments to keep the blocksize small to allow for anonymous mining are clearly valid; even 1MB blocks are a bit marginal with Tor.

Well, that works under my proposed solution, which is a dynamic cap that increases only if there isn't significant objection from the field of miners to an increase. That way as more bandwidth becomes available in the future, even for Tor users, the cap can be raised as opposition to increased size would die down.

...which means an attacker has strong incentives to buy, rent, or coerce hashing power to vote for a blocksize increase. For instance in FinCEN was devious, part of regulating mining would be forcing miners to vote for a blocksize increase; inherently on-chain transactions vs. off-chain meet their goals of financial transparency and restricting privacy. Or this may be something as subtle as funneling money to tx fees for lots of low-value tx's, perhaps with unspendable but non-prunable outputs to further increase the cost of running a mining node well into the future.

Fundamentally miners are not representative of Bitcoin and the choice of what the blocksize needs to be must not be under their control.

[acoindr]

...which means an attacker has strong incentives to buy, rent, or coerce hashing power to vote for a blocksize increase.

I don't believe that would work, at least not any more than an attacker doing the same thing to engineer a 51% attack. It doesn't work by amassing enough 'yes' votes (it's assumed resourceful miners always want an increase). Rather it polls to see if there are significant 'no' votes.

... inherently on-chain transactions vs. off-chain meet their goals of financial transparency and restricting privacy.

Really? I wouldn't think so considering the success of Silk Road.

[Peter Todd]

...which means an attacker has strong incentives to buy, rent, or coerce hashing power to vote for a blocksize increase.

I don't believe that would work, at least not any more than an attacker doing the same thing to engineer a 51% attack. It doesn't work by amassing enough 'yes' votes (it's assumed resourceful miners always want an increase). Rather it polls to see if there are significant 'no' votes.

It's impossible to ask for a significant minority of 'no' votes to be your decision point, because a majority of 'yes' votes can decide to only mine on top of blocks that do not vote 'no'

All you can measure is a majority either way.

... inherently on-chain transactions vs. off-chain meet their goals of financial transparency and restricting privacy.

Really? I wouldn't think so considering the success of Silk Road.

On-chain have some privacy, and privacy that can be taken away by regulating miners. Off-chain with chaum tokens can have mathematically provable privacy simply unattainable by on-chain transactions.

[acoindr]

It's impossible to ask for a significant minority of 'no' votes to be your decision point, because a majority of 'yes' votes can decide to only mine on top of blocks that do not vote 'no'

That requires collusion, though, just like a 51% attack. Any attacker that can convince a significant percentage of miners to behave a certain way can disrupt Bitcoin. That happened recently when Gavin played the role of attacker and convinced enough miners to introduce forking software (aka version 0.8 ).

On-chain have some privacy, and privacy that can be taken away by regulating miners.

I don't see how you get that. Not that I have anything to do with Silk Road but I, for example, have wallet addresses that can't be linked to me in any possible way, no matter how much you analyze block-chain info. Regulating miners can't change that.

[Peter Todd]

That requires collusion, though, just like a 51% attack. Any attacker that can convince a significant percentage of miners to behave a certain way can disrupt Bitcoin. That happened recently when Gavin played the role of attacker and convinced enough miners to introduce forking software (aka version 0.8 ).

"God damn it, why won't that 5% of miners stop putting '1MB' in their coinbases. They're holding up progress!

Fine, lets just block those stuck pigs, we're not colluding or anything."

I don't see how you get that. Not that I have anything to do with Silk Road but I, for example, have wallet addresses that can't be linked to me in any possible way, no matter how much you analyze block-chain info. Regulating miners can't change that.

"FinCEN: From now on miners are money transmitters and must report all unusual transactions.

FinCEN: From now on miners must not mine transactions over xBTC if they satisfy the criteria of unusual.

FinCEN: From now on miners must also not build upon blocks that have transactions that they themselves would not be able to mine due to our regulations."

VPN's and offshore jurisdiction are irrelevant in this scenario - Bitcoin hasn't been banned so we can fully expect mining pools to stay in the US and other visible, regulated, countries to take advantage of the cheap high-bandwidth internet connections required to run a pool.

tl;dr: Don't be naive.

[Mike Hearn]

I think you are massively over-estimating the difficulty of mining anonymously (as is usual with these debates).

Firstly, there is no particular reason mining on a pool requires a lot of bandwidth. Stratum with high difficulty shares already cut bandwidth usage very low.

For running the full node/pool itself, resource requirements are low. You can connect to the P2P network to gather transactions just like any other client. Nobody knows you are mining, even without Tor, as your behaviour is indistinguishable from any other node. Nodes can synchronise their mempools are startup and then know what each peers preferred block contents is likely to be: once solved, a block can be transmitted as a delta against the expected contents. This has the side effect of increasing bandwidth requirements for people who want to mine empty blocks, which is satisfying.

However, even without that change, I can't see a time when mining anonymously is impossible. Your argument, as always, relies on the assumption that "things" cannot possibly scale up, where the thing here is Tor. Tor can scale, so even if mining ends up requiring a lot of bandwidth it doesn't change anything.

Honestly Peter, to be blunt I long ago concluded you're just working backwards from your preferred outcome. You don't want Bitcoin to scale up, and you will continue to invent ever more convoluted and baseless theories as to why it can't, until the end of time. Convincing you doesn't seem to be possible.

[Peter Todd]

Mike, lets suppose for a second that I am correct, and Tor bandwidth and other anonymity technologies do not scale with the bandwidth possible at VPN/co-location providers, and thus running mining (not hashing) operations is not possible anonymously.

What do you expect to happen?

[Mike Hearn]

Not much?

In the event that some jurisdictions with aggressive regulators try to impede mining, it will migrate elsewhere. Only if all mining is made illegal everywhere would it be a problem, and that's equivalent to a worldwide ban on Bitcoin, at which point it doesn't matter anymore.

[jgarzik]

Nobody knows you are mining, even without Tor, as your behaviour is indistinguishable from any other node.

Not true.  Sites already track the first node relaying a particular block.  Targeted observation (wiretap) makes the activity even more transparent, when you find a block.

[marcus_of_augustus]

I'm missing the jump to bitcoin concerning itself about enabling anonymous mining from block size limits?

[Mike Hearn]

Not true.  Sites already track the first node relaying a particular block.  Targeted observation (wiretap) makes the activity even more transparent, when you find a block.

I was referring to the gathering of transactions stage, which is arguably the expensive part, bandwidth wise. If blocks are represented efficiently (eg, list of hashes or deltas against remote expected blocks) then almost all your bandwidth would go on receiving transaction broadcasts, and that doesn't require Tor.

[Frozenlock]

I'm missing the jump to bitcoin concerning itself about enabling anonymous mining from block size limits?

It's an implied jump 

If mining requires a lot of resources (bandwidth and storage), it could be hard to maintain a decentralized network.
With only a handful of miners, it's easier for any would-be hero of this world to try to coerce them for 'the greater good'.