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Author Topic: Recent floods by MrBurns (17yhRAYKJvVmBh14HMxYRHp2Z4erWgk1ne)  (Read 4531 times)
RHorning
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November 20, 2010, 01:47:29 AM
 #21


My understanding of this is really muddled and I'm not not really sure how the fees are decided or what happens when you type in an address, an amount, and try send some bitcoins to somebody.

RH, read my reply, I discussed how that works. If it isn't clear, LMK and I'll try again to simplify it.

Correct me if I'm wrong here:  When you send out the data for a transaction, you also send out some coins for a "fee" (which could be zero) that may or may not be accepted by a miner.  If it is accepted, the miner processes the transaction, keeps the fee, and the transaction is adopted into the network.  If the fee isn't sufficient, the transaction is rejected and not incorporated into that block.

The default reference implementation doesn't necessarily require fees except for transactions less than 0.01 BTC at the moment, which is perhaps where our lines of communication are getting fouled up.  This represents the "typical" acceptance of new blocks into the network, but individual miners can choose their own policies and perhaps even be as selective or indiscriminate of whatever transactions have been forwarded.

It is an interesting aspect of Bitcoins and needs to be documented elsewhere.  I'll see what I can do on that end.

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theymos
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November 20, 2010, 02:04:46 AM
 #22

It is an interesting aspect of Bitcoins and needs to be documented elsewhere.  I'll see what I can do on that end.

http://www.bitcoin.org/wiki/doku.php?id=transaction_fee

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RHorning
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November 20, 2010, 05:54:10 AM
 #23

It is an interesting aspect of Bitcoins and needs to be documented elsewhere.  I'll see what I can do on that end.

http://www.bitcoin.org/wiki/doku.php?id=transaction_fee

I'll work on it.  for instance:

Quote
Whoever sends the transaction knows in advance that they're going to have to pay a transaction fee because the rules about this are shared among all Bitcoin users.

This statement from the documentation is simply incorrect.  When you sen transactions, you don't know in advance that "they're going to have to pay a transaction fee" or even how much it might be.  It is a guess, and as mentioned here on this thread the rules about this are not "shared among all Bitcoin users".  It may not even be most Bitcoin users that share any given transaction fee philosophy.

Yeah, it is a wiki.  I can change that and rework that sentence and fix other documentation there, but I am saying that the network rules on this issue are as clear as mud and the only documentation about it is the source code of the reference application, and even that isn't really all that clear.  This thread is to me clearing that up considerably, and I thank those who are at least trying to be patient with me on it.

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theymos
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November 20, 2010, 06:30:04 AM
 #24

This statement from the documentation is simply incorrect.  When you sen transactions, you don't know in advance that "they're going to have to pay a transaction fee" or even how much it might be.

When I wrote that there were no custom miners and only one set of rules. I updated it:
Quote
Whoever sends the transaction is often able to guess what the appropriate fee will be based on their own fee rules. If Bitcoin believes the fee will be non-zero, it will not allow you to send the transaction without the calculated fee.

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nightrow
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November 20, 2010, 10:31:07 AM
 #25

One small question about transaction fee after reading what you wrote:
What is going to happen to a transaction send with a 0.1 fee for example if every miner require a 0.2 fee ? Is it going to timeout, or will it wait forever ?

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lfm
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November 20, 2010, 03:12:06 PM
 #26

For fees to be reasonable you should figure out your costs first and adjust your fee correspondingly. Currently the whole .bitcoin directory tree seems to be about 227mb (on one of my machines). I recently got a 1tb drive for about $50 so the bitcoin database including log files and all costs me about $0.01135. Current BTC are worth about $0.25 so this disk space costs about 0.0028375 BTC

So if you generate even one block and get NO fees, just the 50BTC standard reward you have paid for a LOT of disk space.
Take 0.01 BTC out of that for disk space and the other 49.99 BTC to pay for the electricity and depreciation on your system and whatever other expenses you have and decide if it is worthwhile for you to try for another block.

If not then QUIT!

You DO NOT need to run a node to play with bitcoin. There are services such as mybitcoin.com that will allow you to keep track of your coins for free! (just the cost of your internet connection).

I don't think we need to worry about free transactions for a long time yet. Not even the spam/spew transactions.
RHorning
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November 20, 2010, 03:59:48 PM
 #27

One small question about transaction fee after reading what you wrote:
What is going to happen to a transaction send with a 0.1 fee for example if every miner require a 0.2 fee ? Is it going to timeout, or will it wait forever ?

A couple of points:

Not every miner is going to expect a given fee.  This is sort of an auction market where miners are free to choose any fee that they desire.  This is the reason there has been resistance on this thread to impose any hard rules on the network and in particular the miners.  Thinking it through, I think that is on the whole a good idea.  The possibility exists that rules could be enforced on fees in terms of what blocks get accepted into the network, but what is being said here is that the miner is the one that ultimately decides to accept the block.

BTW, I agree with the principle that miners should be completely free to accept or reject transactions, and would go so far as to say that there shouldn't be any restriction in the network on those blocks for this purpose.  I know this contradicts what I've written earlier, but I guess I'm convinced now that this is the best way.  To me, it is an issue of freedom, and one where a market approach fixes potential problems.  For those who posted earlier, I'm sold!

Into this market place, there is going to be some sort of competition to collect transaction in order to "earn" the transaction fees.  There may be some users who want to try and push the fees to higher levels, so they will be rejecting a transaction that includes a 0.1 fee (to use your example).  However, either through altruism (they just want to be nice to newbies and paupers) or perhaps they are being simply greedy (they want to collect every last possible coin, no matter how little) there will end up being somebody somewhere that will eventually process the transaction.

I'm sort of curious if somebody would include a 0.000001 BTC fee in a microtransaction of < 0.01 BTC, how many miners would process that transaction?  This isn't theoretical, as the current "default" network already rejects these sort of transactions, so it would be up to a new miner that would have to accept these sort of transaction.  Apparently there have been a few miners who are processing all transactions right now.

As the intrinsic value of Bitcoins increases (which seems to be a general trend and strong reason to believe it will continue), the desire to accept minor transactions will increase.  That sounds like a strong limiting factor on the maximum fee that on average a typical bitcoin user will have to pay in order to get a transaction into a block.  You may have to wait a bit longer, but it shouldn't be too long of a wait.  You trade off transaction fees for speed of processing, where a higher transaction fee will be more likely to be accepted.  There certainly will be times where the timeliness of getting the transaction processed is critical, so there are valid reasons for a person making the transaction to want to pay a higher fee from time to time too.

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andrewegc
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December 08, 2010, 03:19:51 AM
 #28

I just created an account to comment on spam and the connection with fee's.  This seems to be a serious theoretical problem with the current implementation, because it will lead to runaway disk space usage.  And I hope someone can counter my ideas with an explanation or help brainstorm a solution.

Supposedly the market will introduce fees which will curtail spam.  The problem is that there is no real market force to increase fees that I can see.  There is no personal incentive for a given node to charge fees because they only stand to miss out on the fee's that fall below their fee threshold.

It's a "tragedy of the commons". Sure it would benefit the community as a whole to charge fee's, but who's gonna be the first one to increase their fee when they only stand lose potential fee income by doing that.

My understanding is that it costs you nothing extra to perform the block hash search with many low- or no- fee transactions included, but you stand to gain a small profit by including even the extremely low fee transactions.
lfm
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December 08, 2010, 03:59:06 AM
 #29

I just created an account to comment on spam and the connection with fee's.  This seems to be a serious theoretical problem with the current implementation, because it will lead to runaway disk space usage.  And I hope someone can counter my ideas with an explanation or help brainstorm a solution.

"runaway disk space" seems like an exaggeration to me. The most free "spam" anyone can send currently is 50kB per block. Anyone who want priority over the spam can send a fee. No matter how small the fee it will give those transactions priority over the spam. I figure 0.01 btc would currently pay for about 50MB of disk space. Do you still think we need to worry?

RHorning
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December 08, 2010, 03:55:21 PM
 #30

Supposedly the market will introduce fees which will curtail spam.  The problem is that there is no real market force to increase fees that I can see.  There is no personal incentive for a given node to charge fees because they only stand to miss out on the fee's that fall below their fee threshold.

It's a "tragedy of the commons". Sure it would benefit the community as a whole to charge fee's, but who's gonna be the first one to increase their fee when they only stand lose potential fee income by doing that.

There are two things that are going to drive fees in the future even if that isn't an issue at the moment:  CPU bandwidth and disk storage costs.

Simply put, running your computer is going to cost you money, as will storing all of the data.  Eventually there will be people dropping out of the mining business because the chance of getting a block is going to be very low.  I think this is happening even now.

One thing that might induce more people to jump back in is to start demanding fees for transactions, and for that matter all transactions.  It is something I'd love to see put into the current client sooner than later, where each person could start demanding fees for transactions.  Satoshi is trying to put forward an idea of some "charity" transaction where at least a few "free" transactions get put in every once in awhile, but presumably there will eventually be a huge backlog on such transactions.

It mainly is a matter of putting this into the interface where people can start selecting a fee they are expecting.  I realize that there are some who have suggested any sort of transaction with even the smallest fee will be accepted, but I am suggesting that eventually those who are accepting the smaller transactions will likely be "driven from the marketplace" when the number of transactions starts to be very large.  At the moment the issue is mainly that the number of transactions per block is quite small and therefore including any transaction at all is useful.

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December 14, 2010, 04:24:39 PM
 #31

If there is a 50 kb limit per block, what does that mean when legitimate (non-spam) transaction volume reaches that amount?  If each transaction averages 270 bytes, that's less than 200 transactions... and if there's guaranteed to exist only a block every few minutes, wouldn't that mean the whole BitCoin network as a whole cannot sustainably commit an average of more than 200 transactions every few minutes?

Companies claiming they got hacked and lost your coins sounds like fraud so perfect it could be called fashionable.  I never believe them.  If I ever experience the misfortune of a real intrusion, I declare I have been honest about the way I have managed the keys in Casascius Coins.  I maintain no ability to recover or reproduce the keys, not even under limitless duress or total intrusion.  Remember that trusting strangers with your coins without any recourse is, as a matter of principle, not a best practice.  Don't keep coins online. Use paper wallets instead.
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December 14, 2010, 08:40:07 PM
 #32

If there is a 50 kb limit per block, what does that mean when legitimate (non-spam) transaction volume reaches that amount?


Free transactions must wait for another block.  Spamming only consumes space in the block reserved for free transactions, fee paying transactions have space (at increasing fee levels) up to 1 meg at this time.  The 1 meg limit is a hard limit, but much discussion about replacing the hard limit with a more flexible rule has already occurred on this forum.

Quote

 If each transaction averages 270 bytes, that's less than 200 transactions... and if there's guaranteed to exist only a block every few minutes, wouldn't that mean the whole BitCoin network as a whole cannot sustainably commit an average of more than 200 transactions every few minutes?

I believe that the network can sustain a level of about 470 transactions per minute at this time, due to the hard limit.  We know that this is not enough,but these are changable rules.

"The powers of financial capitalism had another far-reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole. This system was to be controlled in a feudalist fashion by the central banks of the world acting in concert, by secret agreements arrived at in frequent meetings and conferences. The apex of the systems was to be the Bank for International Settlements in Basel, Switzerland, a private bank owned and controlled by the world's central banks which were themselves private corporations. Each central bank...sought to dominate its government by its ability to control Treasury loans, to manipulate foreign exchanges, to influence the level of economic activity in the country, and to influence cooperative politicians by subsequent economic rewards in the business world."

- Carroll Quigley, CFR member, mentor to Bill Clinton, from 'Tragedy And Hope'
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