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Author Topic: Block issue SOLVED!? Extension Blocks  (Read 3065 times)
Killerpotleaf
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April 05, 2017, 02:13:36 AM
 #41



as mining rewards drop in half it becomes absolutely mission critical to maximize fee revenue.

best way to do that is probably increase the user base, because increasing fees per transaction
is greatly limited due to competition. Iow, why would I (or anyone interested in saving money)
pay more with Bitcoin when another method is cheaper?

the best way to do it is using some basic economics 101
making blocks that have a size which creates some fee pressure, will net alot more fees in total.
even not considering altcoin competition its clear that a any static blocksize limit will fail to produce a healthy fee market.
1MB = fees pressure so high that poeple simply cant TX
50MB = fees pressure so low that everyone TX can get in the block for free.
both do nothing to maximizes fees/block, and so both lead to less security for bitcoin.
we NEED a dynamic blocksize limit which will yield the most optimal  pressure fees, or bitcoin will be very insecure in the future, and therefore useless and therefore worth 0.


You make a lot of sense but i'm not sure we need a blocksize limit to do this.  
I'm curious if you've read Peter Rizun's whitepaper about the fee market sans blocksize limit.
yes i read it.
I reference it in my essay:
https://medium.com/@adamstgbit_25789/bitcoin-unlimited-to-bring-stability-to-bitcoins-fee-market-6b5a4f882fc0
Quote
Conclusion,
technological limitations create costs to miners for including TX’s in blocks, economical incentives create a balanced fee market based on these costs and TX demand. As subsidy halves again, and again maximizing fee revenue becomes the name of the game for miners, and as competition for collecting these fees grow, so does the NEED to keep a well balanced fee market which yields optimal fees / block. Blocksize cannot outpace TX demand, blocksize cannot outpace bitcoin adoption, node decentralization is in no way threatened by Bitcoin Unlimited’s Emergent Consensus.



I'm slightly confused on your position because it sounds like you agree with Peter that EC can solve the issues...on the other hand, Peter
is advocating that we shouldnt and neednt have a limit that is below market demand, while you are saying blockszie cannot outpace adoption.
I'm not sure if there's an actual disagreement or you're just describing a different property of the natural fee market.


I agree that there is a natural cost to miners for including TXs in blocks. But i do not think this will be the limiting factor in determining Blocksize. Peter says we dont need a block size limit at all because miners won't produce blocks that have a bad risk/reward chance-to-orphen/fees.

I'm saying Peter's theory determines an upper limit, but blocksize won't get close to this limit at all because miners will set a limit which will create fee pressure. This will be like 2MB with today level of adoption and maybe 2.2MB 6 months from now. ( obviously no where near peters limit)

miners are in the business of selling blockspace
they can:
 A) offer lots and lots of blockspace for cheap ( near peters cost per byte )
or
 B) offer a very limit amount of blockspace at a high price

which will yield the more revenue?

well... this is a classic economic problem with a straightforward way of determining how to price your good ( or in this case how to size your blocks )



this optimal amount of block space the miners should be offering, depends on fee paying TX demand, which isn't limitless, and very much tied to adoption.

miners are incentivized to set an Excivies Blocksize (EB) which doesn't go over this optimal block size limit.

miners won't create massive blocks unless there is Massive TX demand.

TX demand will take YEARS to get anywhere near needing 16MB blocks.

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Killerpotleaf
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April 05, 2017, 02:43:23 AM
 #42


i made a few edits to the stock graph to better illustrate what i'm saying

as block size goes up fees go down, but fee revenue is at its highest at 2MB, because science.

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April 05, 2017, 03:14:12 AM
 #43

Very nice Killerpotleaf, do you happen to teach?
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April 05, 2017, 03:24:25 AM
 #44



i agree, i intuited what you are saying before, but credit to you for writing about it!

but obviously there is also the constraint of what other
payment types besides Bitcoin are offering right?


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April 05, 2017, 03:56:48 AM
 #45



i agree, i intuited what you are saying before, but credit to you for writing about it!

but obviously there is also the constraint of what other
payment types besides Bitcoin are offering right?

we can safely assume we are not in competition with paypal or visa, crypto is more compelling than them on many levels, if fees end up a little higher than paypal its not going to impact our success much. however other crypto are in direct competition with us, and while they are subject to the same Hardware limitations ( internet speeds, storage etc.) they are not bound by any silly self imposed limits like 1MB blocks.
we have seen bitcoins market share drop drastically now at scary levels, because of our inability to upgrade.

and off-chain scaling ISN'T GOOD ENOUGH...

on-chain scaling isn't important  because" lower fee = more adoption ", on-chain scaling is important because "  higher miner revenues = more security ".

what's best for miners ( and by extension blockchain security ) is a dynamic blocksize which can adapt itself to the ever growing fee paying TX demand.

if bitcoin doesn't upgrad on-chain, ether or dash will, and 30 years from now dash's blockchain could be more secure than bitcoins!

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April 05, 2017, 04:14:29 AM
 #46

We need segwit to do extension blocks. They've been a part of segwit for a long time.

There is a ton of crazy business interest schemes with SegWit.  Why not do what has always been done?  Either make blocks 1.2MB or be big time like LTC and go to 2MB.  

It's a simple thing that has got twisted ...

After much consideration, I have finally decided to point my miners to a BU pool. 

  
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April 05, 2017, 04:36:44 AM
 #47

if bitcoin doesn't upgrad on-chain, ether or dash will, and 30 years from now dash's blockchain could be more secure than bitcoins!

30 years?  if we don't upgrade, we might not last 30 months.  things move fast in the cryptoworld which is only 7 years old.  look what happened in less than a year with the marketshare...95% to 66%. 

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April 05, 2017, 04:42:48 AM
 #48

if bitcoin doesn't upgrad on-chain, ether or dash will, and 30 years from now dash's blockchain could be more secure than bitcoins!

30 years?  if we don't upgrade, we might not last 30 months.  things move fast in the cryptoworld which is only 7 years old.  look what happened in less than a year with the marketshare...95% to 66%. 

Its the potleaf, he meant 3 Wink

I agree, should fee's, time and functionality/sustainability for parties as a whole continue to move in the wrong direction, 30 months may even be a stretch.

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April 05, 2017, 04:56:22 AM
 #49

if bitcoin doesn't upgrad on-chain, ether or dash will, and 30 years from now dash's blockchain could be more secure than bitcoins!

30 years?  if we don't upgrade, we might not last 30 months.  things move fast in the cryptoworld which is only 7 years old.  look what happened in less than a year with the marketshare...95% to 66%.  

Its the potleaf, he meant 3 Wink

I agree, should fee's, time and functionality/sustainability for parties as a whole continue to move in the wrong direction, 30 months may even be a stretch.

the thing the network effect is strong, and segwit will buy some time, then LN will buy more time, but after a few more block reward halvings, if the onchain TX fee revenue isn't up significantly...

we can continue to go down the worng path for a long long time, avoiding the inevitable. thats why i'm thinking the consequences are years away.

altho admittedly 30years was a bit much.

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April 05, 2017, 05:02:03 AM
 #50

the best way to do it is using some basic economics 101
making blocks that have a size which creates some fee pressure, will net alot more fees in total.

sorry but your and blockstreams high school level understanding of economics is the failure

if a block can only handle ~2500 native transactions
then this is the result:
if blockreward * current bitcoin price leaves a deficit of say $2500 (EG bitcoin price went from $1200-1000 = $15,000 to $12,500)
then that means fee's need to be ~$1 to combine to make up for that deficit.
if blockreward * current bitcoin price leaves a deficit of say $7500 (EG bitcoin reward went from 12.5-6.25 = $15,000 to $7,500)
then that means fee's need to be ~$3 to combine to make up for that deficit.

the result is a LIMITED amount of people (due to only ~2500tx native key users) will get peed off with having to 'just pay more'
the funny part is
segwit with its 75% discount. means although there 'could be' 4500tx segwit users per block IF block was 100% segwit key use. the fee's are then at best 50cent-$1.50 for segwit.
but that means $2-$6 for native key users(undiscounted)


however.
we have a couple years before needing to increase onchain capacity to ofset the next block halving (without having to rely/hope for the bitcoin price to save the day again)

EG imagine the price was stagnant for the next 20 years at $1,200.. and you will see that trying to squeeze more blood out of 2500 people every 10 minutes, wont work.

more transactions per second onchain = more people sharing the burden = less of a burden overall

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April 05, 2017, 05:06:36 AM
 #51

if bitcoin doesn't upgrad on-chain, ether or dash will, and 30 years from now dash's blockchain could be more secure than bitcoins!

30 years?  if we don't upgrade, we might not last 30 months.  things move fast in the cryptoworld which is only 7 years old.  look what happened in less than a year with the marketshare...95% to 66%.  

Its the potleaf, he meant 3 Wink

I agree, should fee's, time and functionality/sustainability for parties as a whole continue to move in the wrong direction, 30 months may even be a stretch.

the thing the network effect is strong, and segwit will buy some time, then LN will buy more time, but after a few more block reward halvings, if the onchain TX fee revenue isn't up significantly...

we can continue to go down the worng path for a long long time, avoiding the inevitable. thats why i'm thinking the consequences are years away.

altho admittedly 30years was a bit much.

segwit wont 'buy some time
bcause the network effect of users feeling the change. does not occur due to just activating segwit. it occurs by people voluntarily moving their funds over to segwit keys.

the burden of moving 46mill UTXO will create MONTHS of constant mempool bloat of native key users moving across. or years of slow switching over of keys just to even try attaining the ~4500tx a block hope.

the other failure of segwit is by offering a 'discount' it make the fee continue to rise, which then begins to impact native key users 4x(due to segwits 75% discount). EG a 10% segwit fee rise is 40% native key rise

the end result is native key users will eventually be paying more to move their UTXO than their UTXO is worth.
we are already seeing that now.
which just results in people not moving their UTXO and creating dead UTXO set of millions of what then becomes 'dust' due to being under say $6 value.

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April 05, 2017, 05:16:00 AM
 #52


i made a few edits to the stock graph to better illustrate what i'm saying

as block size goes up fees go down, but fee revenue is at its highest at 2MB, because science.

However as the number of transactions changes the size of the blocks would need to change to keep the price optimal.   In effect you are just determining what optimal block size is for the current number of transactions.   The only way something like this would work is if the block size was changing almost every block.   
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April 05, 2017, 05:46:56 AM
 #53


i made a few edits to the stock graph to better illustrate what i'm saying

as block size goes up fees go down, but fee revenue is at its highest at 2MB, because science.

However as the number of transactions changes the size of the blocks would need to change to keep the price optimal.   In effect you are just determining what optimal block size is for the current number of transactions.   The only way something like this would work is if the block size was changing almost every block.  

this is correct!
optimal block size is dependent on TX demand, which is known to be going up, in a crazy unpredictable manner.
and so your right every single block would have a different "optimal size"
but thats not the point... the point is there is an optimal size given X amount of demand.
Miners ( and Non-mining nodes too , mine is set for 1.5MB right now Cheesy) will need to smooth out the day to day ups and downs and approximate TX demand for that period of bitcoins history, and set their EB appropriately, each of them will do this individually, and collectively a blocksize limit will be determined through EC.

i think we'll see nodes always kinda lagging behind, and we'll mostly always have blocks that are slightly smaller than what the optimal size should be for that time. but thats a hell of alot better then being 2-4x above or below optimal size as a 1MB or 8MB static limit is sure to produce.

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April 05, 2017, 06:13:17 AM
 #54


i made a few edits to the stock graph to better illustrate what i'm saying

as block size goes up fees go down, but fee revenue is at its highest at 2MB, because science.

However as the number of transactions changes the size of the blocks would need to change to keep the price optimal.   In effect you are just determining what optimal block size is for the current number of transactions.   The only way something like this would work is if the block size was changing almost every block.  

this is correct!
optimal block size is dependent on TX demand, which is known to be going up, in a crazy unpredictable manner.
and so your right every single block would have a different "optimal size"
but thats not the point... the point is there is an optimal size given X amount of demand.
Miners ( and Non-mining nodes too , mine is set for 1.5MB right now Cheesy) will need to smooth out the day to day ups and downs and approximate TX demand for that period of bitcoins history, and set their EB appropriately, each of them will do this individually, and collectively a blocksize limit will be determined through EC.

i think we'll see nodes always kinda lagging behind, and we'll mostly always have blocks that are slightly smaller than what the optimal size should be for that time. but thats a hell of alot better then being 2-4x above or below optimal size as a 1MB or 8MB static limit is sure to produce.

So that is what BU allows but SegWit wouldn't?   If that is the case it makes SetWit a really hard sell. 
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April 05, 2017, 06:33:05 AM
 #55


i made a few edits to the stock graph to better illustrate what i'm saying

as block size goes up fees go down, but fee revenue is at its highest at 2MB, because science.

However as the number of transactions changes the size of the blocks would need to change to keep the price optimal.   In effect you are just determining what optimal block size is for the current number of transactions.   The only way something like this would work is if the block size was changing almost every block.  

this is correct!
optimal block size is dependent on TX demand, which is known to be going up, in a crazy unpredictable manner.
and so your right every single block would have a different "optimal size"
but thats not the point... the point is there is an optimal size given X amount of demand.
Miners ( and Non-mining nodes too , mine is set for 1.5MB right now Cheesy) will need to smooth out the day to day ups and downs and approximate TX demand for that period of bitcoins history, and set their EB appropriately, each of them will do this individually, and collectively a blocksize limit will be determined through EC.

i think we'll see nodes always kinda lagging behind, and we'll mostly always have blocks that are slightly smaller than what the optimal size should be for that time. but thats a hell of alot better then being 2-4x above or below optimal size as a 1MB or 8MB static limit is sure to produce.

So that is what BU allows but SegWit wouldn't?   If that is the case it makes SetWit a really hard sell.  

segwit is an EASY sell, i'd buy into it in a heartbeat. IF its blockweight/effective blocksize thing is removed...

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April 05, 2017, 12:36:45 PM
 #56


i made a few edits to the stock graph to better illustrate what i'm saying

as block size goes up fees go down, but fee revenue is at its highest at 2MB, because science.

The error in this plot is that you think that fees are elastic.  Fees are VERY INELASTIC, meaning your blue curve goes to the sky on the left.  If only 10 transactions are possible, people will be paying HUGE fees in order to obtain one of the 10 places.  The guy wanting to transact 10000 BTC for a huge cocaine deal will need to get the transaction through, no matter what, or they'll get him, so he'll pay 200 BTC of fee.
10 of these transactions, and you earn 2000 BTC per block in fees.  From the moment that you relax, fees will drop drastically per transaction, much more so than your straight line suggests.

And then you see that the optimum is on the left side of the plot, because fees rise much faster than 1/block size, and drop much faster with block size.  
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April 05, 2017, 12:49:38 PM
 #57



we can safely assume we are not in competition with paypal or visa,

Disagree entirely.  i use bitcoin as a paypal alternative for remittances.  anything that
saves business owners money will be "a thing".  This is the easiest use case.
Merchant adoption requires more user adoption but saves business even more
on payment processing.

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April 05, 2017, 04:50:29 PM
 #58


i made a few edits to the stock graph to better illustrate what i'm saying

as block size goes up fees go down, but fee revenue is at its highest at 2MB, because science.

The error in this plot is that you think that fees are elastic.  Fees are VERY INELASTIC, meaning your blue curve goes to the sky on the left.  If only 10 transactions are possible, people will be paying HUGE fees in order to obtain one of the 10 places.  The guy wanting to transact 10000 BTC for a huge cocaine deal will need to get the transaction through, no matter what, or they'll get him, so he'll pay 200 BTC of fee.
10 of these transactions, and you earn 2000 BTC per block in fees.  From the moment that you relax, fees will drop drastically per transaction, much more so than your straight line suggests.

And then you see that the optimum is on the left side of the plot, because fees rise much faster than 1/block size, and drop much faster with block size.  

i think its hard to incress fee pressure without increasing TX demand and simply limiting blocksize.
at one point fees are so high a lot of potential TX can't happen anymore, and this removes some fee pressure, so the higher you push fees the harder it will be to incress fee pressure, its kinda like rocket science, you need more fuel to launch more weight, but the fuel itself weighs somthing so you need more fuel to add more fuel.

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April 05, 2017, 05:10:30 PM
 #59



we can safely assume we are not in competition with paypal or visa,

Disagree entirely.  i use bitcoin as a paypal alternative for remittances.  anything that
saves business owners money will be "a thing".  This is the easiest use case.
Merchant adoption requires more user adoption but saves business even more
on payment processing.


its hard for me to entirely disagree, because not core-fan-boy, but bitcoins usefulness is not only as a medium of exchange, so while we could stand to benefit by being more competitive to paypal, we don't NEED to be. ( i say this but part of me doesn't agree at all, its what i heard others saying, seems to make some sense..)

Is sacrificing bitcoin's utility in the name of keeping full node cost very low, worth it? I think not! but some would disagree.

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April 05, 2017, 06:30:24 PM
 #60

its hard for me to entirely disagree, because not core-fan-boy, but bitcoins usefulness is not only as a medium of exchange, so while we could stand to benefit by being more competitive to paypal, we don't NEED to be. ( i say this but part of me doesn't agree at all, its what i heard others saying, seems to make some sense..)

Is sacrificing bitcoin's utility in the name of keeping full node cost very low, worth it? I think not! but some would disagree.

core wants prunned, no witness modes.. and a cesspit of downstream nodes that dont get all tx data and dont relay segwit transactions
 which is a lot more damaging to the node count than anything else..

dynamics does not mean 8mb by midnight, nor 8gb by midnight.

nodes put in their useragents to what they can COPE with. and pools only make blocks to the amount the majority can cope with. thus no harm to nodes

we are not in the 2009 days of:
3g mobile internet/ADSL landline
Raspberry Pi1 min specs
libsec validation

we are in 2017
4g mobile (approaching 5G)/fibre landline
Raspberry Pi3 min specs
libsecp256k1 validation...

meaning the 'speed' of validation propagation etc is better by between 5-20x compared to 2009's '1mb safe'
its been estimated that 8mb is safe for the network. even core know this and went with their 4mb 'supersafe' weight.
so can we give up all the foolish excuses of needing 1mb as a 'safety barrier'

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