Wall Observer BTC/USD - Bitcoin price movement tracking & discussion

[billyjoeallen]

The ugly answer could be that they don't really care about miner compensation or network security as much as they care about getting their slice (which they would actually be TAKING from the miners).

Now you care about miner compensation and network security? Weren't you the one complaining that you don't want to pay fees because you've bought the right to transact when you bought your coins, etc etc?

High fees = "fuck core devs"
Low fees = "fuck core devs"

For real?

I have said over and over that miners will get more fees if there are more transactions per block. I have said repeatedly that gross miner compensation will go up if we get bigger blocks because the exchange rate will go up because of increased network utility. I have also said many times that I consider miners employees, and any businessman knows that employees don't work if they don't get paid.  Owners (hodlers) and employees both exist to serve customers. Both will be out of a job if we don't do that. 

It's not personal. The Core Devs just have a poor business model.  They can outcompete dinosaurs in a niche market and so they think they should be rent-seeking, but they are ignoring the alts waiting in the wings for them to slip up.  Any businessman worth his salt will tell you that if you don't see the competition, it's not because it isn't there. It's because you aren't looking hard enough. 

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[sAt0sHiFanClub]

High fees = "fuck core devs"
Low fees = "fuck core devs"

I'm satoshi fanclub, and I fully approvre this message.


 

[ChartBuddy]

Coin



Explanation

[sAt0sHiFanClub]

Do you even realize that the long term outcome of Lightning (the Holy Graal of Core folks) would be to massively reduce the amount of transaction fees versus an on-chain scaling?

Wait, what?

Core is simultaneously accused that they want "higher fees" or "fee competition" and now accused for "wanting to massively reduce fees with lightning".

Please decide what core wants.

I think you are being deliberately obtuse - surely you get this?

There's nothing wrong with LN. Nothing fundamental anyway - if bitcoin really wants to get to visa like adoption ( and i still think thats a bad idea) then LN is the only game in town.

But it needs to play on a level playing field with the rest of the users - i.e those who wish to use the blockchain directly. Blockstreams intention is to artificially constrict supply so as to force smaller payments to LN, irrespective of whether it offers them a better service or not.

Miners get higher fees, but fewer of them. The bulk of the volume, low fees go to LN

What I'm saying is that it needs to survive in an open market. Not some sort of Soviet style managed/protected environment.

[coinzat]

blocks are not always full as some people think.
I think some people are making useless transactions to make the blocks full and promote for their block size increasement . and that is why most of the blocks where full in the last few days

[AlexGR]

In summary, averages are tricky when it comes to interpretation and divining meaning. Which is why I included the per-block indicator dots.

https://blockchain.info/charts/avg-block-size?timespan=30days&showDataPoints=false&daysAverageString=1&show_header=true&scale=0&address=

Avg seems to be at around 0.63 - 0.65mb right now.

This means the protocol can accommodate an increase of an extra 53-58% in txs (and that includes dust and spam txs like the ones we have now).

The real question is why miners aren't mining these transactions to get to the limit. Why are they issuing empty blocks, why don't they even care to change the 750kb parameter to 1mb etc etc. The obvious answer is because the fee incentives are too low, so why should they?

So, one could argue that while the free market partially works regarding miners and transaction mining (some miners don't care to mine everything), an increase in block size is in effect a valve-relief / bypass of the free market.

1.The protocol allows 1mb
2. Miners mine up to 0.65mb because some don't feel incentivized enough and want to mine empty or 750kb blocks - so due to the lack of fee incentives, the extra 53-58% capacity is unrealized
3. The solution would be a free market one (people pay more fees / miners start mining transactions until we reach 950-980kb on avg), instead some developers create a free market bypass-valve, increasing block size to 3x our current level of txs.

I wonder how much this rationale can "scale" if miners start rejecting more and more transactions for mining due to low tx fees. Can the solution be "ah yeah, fuck the 90% of the network that doesn't even mine, we'll simply raise the block size for the rest of the 10% of the miners who actually mines transactions"? I guess we'll find out.

On the other hand, if, say, Chinese miners have an extra incentive to mine large blocks because they have like 60-70% hashrates and the slow propagation to the rest of the world would put them into a superior position, they might even have an incentive to mine all kind of junk for free and then emit full blocks which get insta-verified through the Chinese "intranet" but make all other irrelevant because they are too slow to catch up. Thus you get a bloating incentive

I've read a counterargument, like the one Hearn says, about China not wanting big blocks due to the great firewall etc - but most of them more or less signed up for classic, didn't they? So I guess if they are confident due to their supermajority and that intra-Chinese propagation will be a peace of cake, then why worry about block sizes? It's the rest of the world that would have to worry about them. And I'm not sure I even understand 5% of the depth of the problem in all its angles and dimensions.

[billyjoeallen]

blocks are not always full as some people think.
I think some people are making useless transactions to make the blocks full and promote for their block size increasement . and that is why most of the blocks where full in the last few days

why does it matter? If you impose a maxblock size, you may increase the fees paid by bad actors, but you increase the fees for everybody else, too. If you impose a max block size, all you are doing is decreasing the number of bogus transactions needed to congest the network! 

You're not making it harder or easier to prevent a spam attack by keeping blocksize small. You're just transferring the cost of spam prevention from the miners to the users, who will naturally be willing to pay less for their bitcoins, so the miners save nothing and the users use less.  You're trying to cure a headache with a guillotine.

[becoin]

It is BTC or the BTCC altcoin. It is your choice.

[Richy_T]

This means the protocol can accommodate an increase of an extra 53-58% in txs (and that includes dust and spam txs like the ones we have now).

This is faulty thinking. We will start to experience serious issues well before 100% and user experience issues even before that. Already several times we have had two full blocks in a row and possibly other times more that I don't recall.

It is not enough that transactions occur eventually, they should also happen in a timely manner.

[AlexGR]

This means the protocol can accommodate an increase of an extra 53-58% in txs (and that includes dust and spam txs like the ones we have now).

This is faulty thinking. We will start to experience serious issues well before 100% and user experience issues even before that. Already several times we have had two full blocks in a row and possibly other times more that I don't recall.

It is not enough that transactions occur eventually, they should also happen in a timely manner.

My postal service has at least 3 different speeds. A priority, B priority and express. And I can also use private courier for even faster. So 4 types of fees for 4 different delivery speeds.

If I don't care about the speed, I'll go second priority. If I do, I'll pay the premium. It's that simple.

There's no entitlement that I can produce all kind of spam and they have to be included in one or a few blocks (for peanuts).

You pay the fee, you are in. In a timely manner.

[Richy_T]

There's no entitlement that I can produce all kind of spam and they have to be included in one or a few blocks (for peanuts).

Guess what, there's no kind of requirement of that for miners either. Even with no block size limit at all. So moot point.

You pay the fee, you are in. In a timely manner.

Unless the block is full and yours happens to be amongst the lower fees *no matter what fee you actually attached* and *no matter what miners would be willing to include your transaction for*.

Go down the post office, pay first class for a parcel to your mother to arrive in time for her birthday then watch in amazement as she doesn't get her present and the post office guy explains "The guy over there wanted to pay more so we threw your parcel in the back of the storage room, LOL"

You pay the fee, you are in. In a timely manner.

OK, what is "the fee"? I want numbers.

[BlindMayorBitcorn]

[–]theymos 4 points 4 months ago*

The fee market doesn't work for incentivizing mining in general. Firstly, the fees that people pay are totally unrelated to the security that they receive, so people have no incentive to pay more than is necessary for their desired confirmation time. Secondly, if there are even just a few stupid or generous miners who accept transactions at a loss, then miners as a group lose their ability to enforce reasonable pricing. If 1% of miners accept transactions with essentially no fee and 99% of miners only accept transactions that are high enough to pay for their current costs plus a little profit, then at least some users will send transactions at the lower fee level to save money. But since adding just one more transaction is nearly free, the latter group of miners will constantly want to accept these cheaper transactions as well to make a little more money, and I'd expect the percentage of low-fee miners to gradually increase. So I'd expect the actual transaction fee to move toward the cost of adding a transaction to a block, which is almost nothing, and certainly not enough to support sufficient network security.

One way of solving this is by artificially restricting the size of blocks....

https://www.reddit.com/r/Bitcoin/comments/3k3kli/theymos_mike_hearns_view_is_similar_to_satoshis/cuugy1p

Hmmm.

[LFC_Bitcoin]

Russian official wants to ban bitcoin entirely. If that passes. They have the largest population and even if 35% have been using it that is a large chunk of bitcoin users.
Watch the price drop on that news.

Haven't they banned bitcoin about 3 times already!

[AlexGR]

Unless the block is full and yours happens to be amongst the lower fees *no matter what fee you actually attached* and *no matter what miners would be willing to include your transaction for*.

Now you are arguing that the market is broken because you can never be in the top 1500+ bidders (1500+ txs that go through)?

That's impossible.

OK, what is "the fee"? I want numbers.

It would depend on what others are paying at a certain time. It's not fixed in time. That much is obvious.

[madmat]

Bitcoin port is 8333 and not 9333.

Correct. Entirely a typo and fixed now.

Happy to help.

[LFC_Bitcoin]

There's no entitlement that I can produce all kind of spam and they have to be included in one or a few blocks (for peanuts).

Guess what, there's no kind of requirement of that for miners either. Even with no block size limit at all. So moot point.

You pay the fee, you are in. In a timely manner.

Unless the block is full and yours happens to be amongst the lower fees *no matter what fee you actually attached* and *no matter what miners would be willing to include your transaction for*.

Go down the post office, pay first class for a parcel to your mother to arrive in time for her birthday then watch in amazement as she doesn't get her present and the post office guy explains "The guy over there wanted to pay more so we threw your parcel in the back of the storage room, LOL"

You pay the fee, you are in. In a timely manner.

OK, what is "the fee"? I want numbers.

I don't know why but the bolded bit really made me laugh.

[billyjoeallen]

This means the protocol can accommodate an increase of an extra 53-58% in txs (and that includes dust and spam txs like the ones we have now).

This is faulty thinking. We will start to experience serious issues well before 100% and user experience issues even before that. Already several times we have had two full blocks in a row and possibly other times more that I don't recall.

It is not enough that transactions occur eventually, they should also happen in a timely manner.

My postal service has at least 3 different speeds. A priority, B priority and express. And I can also use private courier for even faster. So 4 types of fees for 4 different delivery speeds.

If I don't care about the speed, I'll go second priority. If I do, I'll pay the premium. It's that simple.

There's no entitlement that I can produce all kind of spam and they have to be included in one or a few blocks (for peanuts).

You pay the fee, you are in. In a timely manner.

If you're buying a coffee or are a retailer with a POS terminal, you need the transaction to go through fast. If you're buying a tanker full of North Atlantic crude, you can wait a few hours. It's the small transactions that need to go through fast, and the 1MB cap is making that impossible. BUT You will never get the crude transaction if you don't get enough of the smaller transactions for Bitcoin to build up it's market cap and liquidity.  There will be a need for LN type sidechains in the future ONLY if we don't get too greedy by building a xaction fee market before the BTC market is ready.

If you estimate how many MW/sec the mining network consumes and compare it to how many xactions/sec it processes, you can tell mathematically how much a BTC xaction really costs at a given power cost. Currently, this is between $2-5 PER transaction (according to Toomim, an electrical engineer) and is not significantly cheaper than legacy payment systems. This can be fixed by increasing the block size. 

[Richy_T]

Unless the block is full and yours happens to be amongst the lower fees *no matter what fee you actually attached* and *no matter what miners would be willing to include your transaction for*.

Now you are arguing that the market is broken because you can never be in the top 1500+ bidders (1500+ txs that go through)?

That's impossible.

No. I'm saying that with limited size blocks, there is no fee which guarantees you a place in the next block since others may be bidding higher than you. Even you have a fee of $5, if everyone else is at $5.01, you're out of luck, even if a miner really wanted your $5.

OK, what is "the fee"? I want numbers.

It would depend on what others are paying at a certain time. It's not fixed in time. That much is obvious.

Wait, I thought we were comparing to parcel delivery services. Which one does that?

[AZwarel]

Do you even realize that the long term outcome of Lightning (the Holy Graal of Core folks) would be to massively reduce the amount of transaction fees versus an on-chain scaling?

Wait, what?

Core is simultaneously accused that they want "higher fees" or "fee competition" and now accused for "wanting to massively reduce fees with lightning".

Please decide what core wants.

Core people are clueless about economics. They doesn't understand the consequences of their wishes.

Maybe you are able to think for yourself and see what they don't see. What is the long term outcome which produces the more transaction fees: on chain scaling or off chain scaling (e.g. Lightning)?

This. They think scarcity alone will bring value (price appreciation) if it is done decentralized. Oblivious to the fact that without the utility of being a p2p payment system with very broad (read: millions can use it simultaneously) access (read: low fees, not no fees!), on the network itself brings most part of the value, not scarcity - we want to use it for trade, so because it is secure (decentralization is part of security, not utility), through this utility it gains economic value, therefore continuing securing it brings income, competitive mining occurs, security rises, we trust it even more etc.. This is a self reinforcing scenario, IF, and only if we keep in mind, that the end is to have a value exchange network, not a digital collectible, without economic action. This is what free market money after all, the value is given only by how much economic activity it makes possible (money trade>> barter trade), aka it's utility, not by the physical properties themselves - those are just features, enforcing the "mass illusion"!

Once again, let me stress it:
For economic purposes, it does not really that important to have this security model, the consensus mechanism (longest chain rules all) is only there to skip the need for trusted parties, hence making value exchange smoother and cheaper - by reducing transaction and maintenance costs (and by accident making it permisionless, and voluntary!).
Network decentralization is a feature, to reach value exchange without 3rd parties, not an end in itself. The point is:

"   A  purely   peer-to-peer   version   of   electronic   cash   would   allow   online
payments   to   be   sent   directly   from   one   party   to   another   without   going   through   a
financial institution"

Core people might forgot this, but PoW mining, decentralization, OS, and p2p are only means to that end: a trustless payment system.

[AZwarel]

The genius part of Bitcoin is that is more than an engineering work, the design understands basic economic and psychological principles (game theory), and unite them in an environment, where everyone can join voluntary.

Somehow the economic views get forgotten more and more when we think about what bitcoin is/should be. We just can not take parts (not code, but working principles) out of this equation based on speculation or ideology, or wishes, or fears, without endangering the whole.