MoonShadow
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November 30, 2010, 01:05:58 AM |
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I suspect the generator rules can vary with time, but to fend off chaos they should be a deterministic function of the content of previous block(s) and not depend on the transaction pool. I also suspect that if the customers & merchants do not hold a significant fraction of the Ghash/sec, the 'rules' will tend to make a generator cartel with high fees.
Yes I believe the real potential issue is the 'cartel,' I'm not worried about the transaction fees being too low, rather too high. I think that studying this with game theory would be very fun, but, I don't have the time also. There can be no 'cartel' in Bitcoin, because there can be no monopoly. The barriers to entry into the generation pool are simply too low, and there is no way that a government could enforce an artifical monopoly even if it wanted to. If the transaction fees begin to creep up due to consolidation of the generation pool, others will begin to notice and they will choose to participate as the possibilites of a random reward become worth the costs. This will create a price point that is ever fluctuating, but balanced, as this effect removes any pricing power of any group of generators in collusion. I would predict that the transaction fees will be somewhere between 0% and 3% on average, but closer to 0%; because 3% is where the credit card companies and PayPal have set their prices, and they do have a degree of pricing power. If a 'cartel' were to set up a datacenter that could dominate the network, but only include transactions with fees at say 2.9% (PayPal's regular rate), they would be ignoring an entire set of fee paying transactions that only non-cartel generators could capture. The results being that the network would generally see that 2.9% is the premium price to get one's transaction recorded quickly, but if one is willing to wait until one of the non-cartel generators then there is a budget option (currently that option is free). The cartel could not be certain that they could even capture the premium fees, so they would have a choice to make. Either recognize that they don't have the kind of pricing power that they thought that they did, or ramp up their generation capabilities until they do. The second choice creates an 'arms race', as for as long as the cartel increases their capacity, they must attempt to pass on that cost, but they can only do so temporarily before non-cartel generators see a profit opprotunity to do the same. Eventually the cartel hits a point that it can no longer continue, and in the meantime the system has benefited from their attempts to corner a market that cannot be cornered. Of course, anyone with the resources to do any of this is also going to hire people who know the system, who are likely to point out that they can't really do what it is that they want to do. |
"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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MoonShadow
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November 30, 2010, 01:07:03 AM |
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Most transaction are free, but you can make it go faster by paying transaction fees.
Will there be a default fee amount included in future clients, or will be have to guess/check what the average miner is charging to process transactions? Some clients may have a default fee amount, but I doubt that those will survive in the marketplace. |
"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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da2ce7
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Live and Let Live
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November 30, 2010, 02:13:41 AM |
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@creighto, in general thank-you for sharing your excellent understanding of economics! It is well appreciated, by myself, and I'm sure many others on this forum.
On cartels:
There will never be a problem with a cartel that has less than 50% of the generation power. The problem lies with a cartel that has significantly more than 50%. Any block that accepts transactions that the cartel rejects (i.e. low fees), would be orphaned by the cartel, and in a short time later, the cartel will have developed a block chain much longer than the chain developed by the so-called 'scabs.'
The only way I can foresee the free market correcting for the cartel, is for the people conducting the transactions (as a large group) to ignore the cartel's block chain when they behave badly, and only accept the (shorter) scab chain that isn't accepted by the cartel, until the cartel gives up and accepts the chain with small transaction fees.
The problem for bitcoin is that when this 'war' / standoff between the people doing the transactions and the cartel happens, there may be a good 20 blocks of uncertainty before a winner is decided. It really is all about 'my gun is bigger than yours.' This could mean that there would be a good 2h of time where transactions will not be secure from double spending. However there is nothing stopping a smart client from checking both chains.
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One off NP-Hard.
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MoonShadow
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November 30, 2010, 06:26:44 AM |
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@creighto, in general thank-you for sharing your excellent understanding of economics! It is well appreciated, by myself, and I'm sure many others on this forum.
Oh, thank you! And your quite welcome. On cartels:
There will never be a problem with a cartel that has less than 50% of the generation power. The problem lies with a cartel that has significantly more than 50%. Any block that accepts transactions that the cartel rejects (i.e. low fees), would be orphaned by the cartel, and in a short time later, the cartel will have developed a block chain much longer than the chain developed by the so-called 'scabs.'
Although there is nothing wrong with anything you said in this post, bear in mind that the act of securing 50% of the generation is no small task even for a cartel with nation-state resources, and maintaining that majority is vastly more difficult. I won't say that it is impossible, but I would say that the odds that any single nation or private group acting in concert could maintain such an escalating 'generator war' against not only the existing and/or future bitcoin community, but also the generating capacities of nations or other private/political groups who have something to gain by opposing the desires of the cartel/nation attempting the takeover would be somewhere close to the odds of a verifiable bitcoin address collision within my lifespan. Which is to say, slim to none. |
"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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ByteCoin
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April 29, 2011, 01:29:27 PM |
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There will never be a problem with a cartel that has less than 50% of the generation power.
This was posted when I was away from Bitcoin for a while. I've just been referred here by another thread. A miner or group of miners with >40% of the hashing power can mine more than their fair share of blocks under very reasonable expectations. Someone with 46% of the hashing power can win 51% of the blocks. I now call this strategy "hostile mining". Recent post here http://bitcointalk.org/index.php?topic=6284.msg99312#msg99312ByteCoin |
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roger0801
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January 18, 2018, 02:55:06 PM |
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I just saw a blog that stated that the tenX wallet dont charge any transaction fees for BTC transactions.
After i tried it, i can confirm there are no fees. After transfering 1USD my friend recieved 1USD.
How ist that possible?
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