WARNING! Bitcoin will soon block small transaction outputs

[DeathAndTaxes]

So is this basicaly because there is highly illegal shit like CP embedded in the blockchain forever via nano-transactions?

Of course this would never be admitted, but it comes right on the heels of rumors of its use for this purpose

No that has nothing to do with this.  One could still "embed" data in the blockchain by just ensuring the outputs are larger than the dust threshold.   

[Le Happy Merchant]

http://en.wikipedia.org/wiki/Dihydrotestosterone

http://en.wikipedia.org/wiki/Distributed_hash_table

We are two different kinds of nerd.

[kokjo]

http://en.wikipedia.org/wiki/Dihydrotestosterone

http://en.wikipedia.org/wiki/Distributed_hash_table

We are two different kinds of nerd.

likely to be true. but due to the context(bitcoin, CS, and internet) Distributed hash tables is what DHT means.

[Gavin Andresen]

The fact that usually it works because most of the outputs were recently created is incredibly dangerous. If the ratio of best case to worst case performance gets bad enough the attacker just has to come along with a block spending outputs that weren't recently created, or otherwise picked in a way where retrieval happens to be slow, to knock slower miners offline.

Who gets to decide how slow is too slow?

Mining these days requires investing in ASIC hardware. Solo mining or running a pool will very soon require investing in a reasonably fast network connection and a machine with at least a few gigabytes of memory.

Knocking the slowest N% of solo miners/pools off the network every year (where N is less than 20 or so) is not a crisis. That is the way free-market competition works.

[jonytk]

Now, we will be regulated to only sending transactions of a certain size.  No free market choice here...

Shame of them limiting the amount to one satoshi! it should be 1/100000 of a satoshi.....

What kind of argument is that?  

You have a point, but Bitcoin started with an understanding that 1 satoshi was the minimum.  Now, we're being told that the limit is 5340 satoshis, with no free-market input on the matter.  It's rather disappointing.  Individuals should be able to decide what size of transaction is too small - we shouldn't all be forced to suddenly abide by the same arbitrary rule.

5340 satoshis is negligible, less than a US or Euro cent, and a very sensible minimum. This cutoff is a needed arbitrary rule which mirrors the real-world where fiat sub-cent transactions are also unwelcome.  The 5340 will be reduced as BTC value increases.

This whole thread is a fuss about a benefit interpreted wrongly.

The Achilles Heel of Bitcoin is being swamped by transactions worth less than a cent because, unlike fiat coinage transactions, Bitcoin transactions are stored on thousands of servers for years or forever.

This...

It increases the costs of that dataset that cannot be pruned

There's no real reason the dataset cannot be pruned - i've been playing with a DB copy of a blockchain, looking at ways of "removing" the records for accounts with a nil balance (amount out = total amounts in) where date is > 30 days ago

I think you misunderstand.  Nobody is saying the blockchain can't be pruned.  IT CAN be pruned however the UXTO (set of unspent outputs which can still be inputs for future txs) CAN'T be pruned.  That is fine because generally the UXTO is going to grow slower than the blockchain (people tend to spend unspent outputs creating roughly the same number of unspent outputs).  There is one exception.  That is UNECONOMICAL outputs.

If you have a 0.0000001 output but it would cost 100x as much in fees to spend it would you spend it?  Of course not.  Kinda like mailing a penny (at a cost of $0.46) to your bank to apply to your mortgage principal.  Nobody does that it doesn't make economical sense.  So these uneconomically outputs are likely NEVER going to be spent.  Each one that is produced won't be spent and thus won't be pruned and will remain in the UXTO forever (or a very long time on average) this is causing the UXTO to bloat and will continue to bloat as there is no reason for anyone to ever spend these outputs (and spending is what allows an output to be pruned).

The UXTO is the critical resources.  In order to validate tx quickly the UXTO needs to be in memory.  So what happens when the UXTO is 32GB? 64GB? 200GB?  Now if those are "valid" outputs likely to be used in future tx well that is just the cost of being a full node.  But when 50%, 70%, 95%+ of the outputs are just unspendable garbage it greatly increases the processing requirements of full nodes without any benefit, to anyone.

I don't *need* as a _user_ of bitcoins the whole blockchain, if I could get "balances at point in time" and the journal entries after that.

Of course you don't which is the whole point of pruning the blockchain however you do need to retain a copy of every unspent output otherwise when you receive tx or block containing that output as an input in a new tx you can't validate the tx or block.  If the input is coming to you, you can't even know if the tx/block is valid or just some nonsense garbage that an attacker sent to trick you into thinking your got paid.

This unprunable dataset is a subset of the blockchain however tx below the dust thresholding simply bloat this.

Absolutely,
 the solution could be "send all dust transactions in a transaction to miners as fees or back as change" IF the destination address IS empty(or under 0.1btc),

that will help with the spam and spam like transactions, example: 1000 million chinese/indian creating new addreses, going to a faucet and receiving satoshis that will never be used because they will lost their wallet.dat in hd crash... If they want to use the faucet they should get 0.1 btc first.

[pjheinz]

Is this why I sent a tx of .025 BTC with a .001 transaction fee 3 hours ago and it still is only seen by 1 peer

[Peter Todd]

The fact that usually it works because most of the outputs were recently created is incredibly dangerous. If the ratio of best case to worst case performance gets bad enough the attacker just has to come along with a block spending outputs that weren't recently created, or otherwise picked in a way where retrieval happens to be slow, to knock slower miners offline.

Who gets to decide how slow is too slow?

Mining these days requires investing in ASIC hardware. Solo mining or running a pool will very soon require investing in a reasonably fast network connection and a machine with at least a few gigabytes of memory.

Knocking the slowest N% of solo miners/pools off the network every year (where N is less than 20 or so) is not a crisis. That is the way free-market competition works.

BTC Guild right now.

[Gavin Andresen]

Who gets to decide how slow is too slow?

BTC Guild right now.

Okey dokey.

Have you contributed any patches to p2pool to make it more efficient / easier to install / etc? If not, why not if you're so worried about centralization?

(honest question, I don't keep up with p2pool development because I'm personally not terribly worried about mining centralization)

[boonies4u]

Who gets to decide how slow is too slow?

BTC Guild right now.

Okey dokey.

Have you contributed any patches to p2pool to make it more efficient / easier to install / etc? If not, why not if you're so worried about centralization?

(honest question, I don't keep up with p2pool development because I'm personally not terribly worried about mining centralization)

Bitcoin mining for profit will be like farming profitably IRL. Farms gets larger and # of farmers gets smaller.

Key word : for profit

[jgarzik]

One realistic scenario is that some players mine at a loss, simply because they find other value in mining -- keeping bitcoin decentralized, keeping bitcoin secure, processing non-standard transactions, etc.

[dree12]

One realistic scenario is that some players mine at a loss, simply because they find other value in mining -- keeping bitcoin decentralized, keeping bitcoin secure, processing non-standard transactions, etc.

We can't design the network assuming miners will mine at a loss. That's why so much stuff will have to eventually be changed.

Although microtransactions constitute little of the transaction volume, they do constitute a significant amount of the fees. As competition goes down, miner revenue will decrease. And as mining revenue decreases, increased centralization will result. Although it's good to reduce spam while block subsidies form the majority of miner revenue, we should be open to revoking these changes in the future.

I believe that there should be a certain "network health" index that reports on how much miners earn in fees. If this index drops too precipitously, the Bitcoin network should band together to stimulate miner revenue. Luckily, we have many untapped sources of fees yet:

• The block size limit is at 1 MB. Assuming continued Bitcoin growth, this will eventually be stalling miner revenue. Increasing this will increase transaction volume and therefore miner revenue. This is probably the most powerful method of strengthen the network, but must be done cautiously as it requires a hardfork.
• Non-standard transactions, including these microtransactions, are plenty and can eventually be upgraded to standard. This will increase fee-paying transaction volume and help stimulate network health. These don't require hardforks, but do require many people to upgrade to have an effect.
• If eventually Bitcoin is integrated into the financial system, governments can transparently offer subsidies to Bitcoin miners through otherwise meaningless but high-fee transactions. This would be similar to a stimulus plan for economic failure, as we have now. This is probably the best solution to intermittent problems, as no end-user action is required.

[jgarzik]

We can't design the network assuming miners will mine at a loss.

No one has ever suggested doing so.  A situation that can be realistic one miner might not be realistic for another -- free market, free choice.

[BitBank]

Relevant question:

why hasn't the price of BTC dropped substantially as a result of this announcement?

[scintill]

why hasn't the price of BTC dropped substantially as a result of this announcement?

Because nobody really cares that they'll have a hard time sending less than $0.0062445 (5430 satoshis @ $115/BTC).  There's always been a lower limit on divisibility.

[solex]

why hasn't the price of BTC dropped substantially as a result of this announcement?

Because nobody really cares that they'll have a hard time sending less than $0.0062445 (5430 satoshis @ $115/BTC).  There's always been a lower limit on divisibility.

Lets just make up more stuff. I am pretty sure the price didn't drop cause most people don't understand how the regulations will be hurting bitcoins in the long term. The market is dumb, their is a few really smart people in the market, but for the most part, as a whole the market is dumb.

Wow. It's the opposite. The market is smarter than any single human. It works like this:

http://www.youtube.com/watch?v=iOucwX7Z1HU

[scintill]

Because nobody really cares that they'll have a hard time sending less than $0.0062445 (5430 satoshis @ $115/BTC).  There's always been a lower limit on divisibility.

Lets just make up more stuff. I am pretty sure the price didn't drop cause most people don't understand how the regulations will be hurting bitcoins in the long term. The market is dumb, their is a few really smart people in the market, but for the most part, as a whole the market is dumb.

What is there to make up?  I stated an opinion, some figures, and a fact about the protocol.  Are my figures and facts wrong, or my opinion?

My opinion is that because the market has not moved significantly, nobody cares.  Or, perhaps they don't know about this, which is another form of "not caring."  If they can't be bothered to follow the news and make decisions based on it, the future of bitcoin must not be very important to them.  That's their choice, but you seem to believe others who are smarter, should make it for them.  If that's really what you believe, we have an irreconcilable difference of opinion, but I think you'd be hard-pressed to make the case that your way of thinking is in line with "the spirit of bitcoin" or what the average user wants.  (Oh, another theory: the people who cared have sold their bitcoins for good, and people who don't care bought them, bringing the market to equilibrium.  If true, this means the changes have driven people away from bitcoin, but nobody said it has to be palatable to every single person; that's impossible.  Use/create an altcoin if bitcoin is unacceptable to you.)

Since you're so much smarter than the market, please enlighten us how these regulations will be hurting bitcoin in the long term?  Seriously, if there's a reason, I want to know.  Is there some reason a 5430-satoshi minimum hurts us, but a 1-satoshi minimum didn't?  Remember that the network sets the minimum as each node wills, so it can go back down to 1 satoshi if that's what they want.  If so, where is the threshold where it goes from acceptable to unacceptable?  Or is any change from what Satoshi blessed automatically bad?  In that case, bitcoin has been harmed hundreds of times over the last few years.

[dree12]

I consider these regulations similar to a bank account. We will eventually have to take them out to fund the network, but that's not necessary now. So we'll earn some interest (the interest being the lack of spam and smaller blockchain sizes) in the meantime.

[scintill]

It shows how stupid you really are, you said about 10 things just now that didn't make any sense.

"If that's really what you believe, we have an irreconcilable difference of opinion, but I think you'd be hard-pressed to make the case that your way of thinking is in line with "the spirit of bitcoin" or what the average user wants."

This right here means you didn't read any of this thread and your points are invalid. The "Spirt of bitcoin" is not to make censorship on the blockchain. That is what this upgrade does. So thank you for your dumb opinion with no research.

If you read nothing else:  You call this censorship.  The blockchain already "censors" transactions less than 1 satoshi because they are not expressible by the protocol.  Again, why is this significantly different than "censoring" values less than 5430 satoshi?  You have chosen to ignore the low value of 5430 satoshi, which makes me believe you feel it's irrelevant, and it's just the principle of it.  That's almost an understandable hard-line ideological reason, but then how is even a 1 satoshi minimum acceptable, then?  "I want to send 0.1 satoshi, and the client is censoring me by not allowing it!"  I'm guessing you weren't campaigning against that some months ago before this change came up.  Did you complain when 0-satoshi outputs were made non-standard in similar fashion to this change?  That would actually be more literally censorship, since there is no transfer of value, only information.  This is the biggest hole I see in an argument that is supposedly only about an ideological offense to censorship.  There has never been a Bitcoin network that did not restrict transaction values in some way.  The only argument left is that further restricting is automatically bad, but I don't think that is reasonable and self-consistent.  As I pointed out, 1 possible transaction value (zero) has already been removed.  Was that censorship less severe just because it was smaller, or was it because it was "censorship" of "speech" (zero value) you also did not support?  There could be more possible answers (please give one if you have another), but these seem hypocritical from a hardline purely "free speech" perspective.  Similarly I can't think of a consistent reason to support divisibility only down to 10^-8, if you ardently believe that transaction value should be a form of unrestricted speech.

Maybe it was a little garbled; I find some of your posts to be the same way to me.  I made the mistake of trying to address several points and it probably got jumbled.  I think it shows you are not willing to have any reasoned discussion about this, that you don't even attempt to address any more than one sentence of what I wrote but spend the rest of your post calling me stupid and uninformed.  These sorts of tactics will not persuade anyone who might have been sympathetic to your arguments and able to make any difference.

I would agree censorship is against the spirit of bitcoin, but this isn't censorship because it's voluntary.  If everyone running a node updates but changes their settings back to a 1-satoshi minimum, nothing will change.  If people update and don't care to change defaults, or agree with them, this change will happen.  It's like democracy.  I'm getting tired of the arguments about "nobody ever changes the defaults, so the defaults are de-facto rules."  I agree this is probably quite true, but it's the users' problem for not bothering to understand what the beta software they're running on their system is doing.  You should advocate about that issue, not what the defaults are.  (And yes, this is a problem with software in general; average computer literacy is nowhere near high enough to effectively do all the stuff that people are trying to do with computers.  If you want a payment solution that "just works", I'm sure someone like Apple has such a thing, but you have absolutely no transparency in how it works.)

[scintill]

It is not voluntary on the client level. Remember miners have to to include it in the blockchain, no miner includes it in the blockchain then that is the way it goes. So far no miners are stepping up to the plate and saying they will allow 0.00000001 in the blockchain, it is then not voluntary. Miners have the power, and therefor we either go with them or get run over by them. No two ways about it. Go read this thead I have already explain this 1000x times and there are many people that agree with me. This is a small change yet a big one as well. This is changing the whitepapers, to a different terms. Gavin and the developers are power hungry and are showing us that they can flex their power and change whatever they want. You don't see it, and that is your problem, but just as I was correct about the foundation, I will be correct about this. Bitcoin is going down and this is just the beginning.

I'll agree that people (including myself) have sometimes oversimplified it.  If 90% of the network stops relaying small transactions, they are effectively dead, no matter who is willing to mine them or the minority that will relay them.  However, this could already be happening -- there is no guarantee that everyone will relay and mine every transaction.  I think there are some pools currently censoring Satoshi Dice.  The incentives are engineered to attempt to make cooperation be in everyone's best interest.  If nodes don't want to process your transaction, then you'll have to pay more, or use a currency backed by laws forcing it to be legal tender, and rely on people with guns and human cages to make sure your transaction is processed.  I mean, there's a certain baseline level of consent you have to meet to make any transaction happen.  The more parties you add, the higher it might be.  No amount of complaining about fairness or "Satoshi's vision" will change that, unless human nature changes.  I'll agree that maybe a .1BTC fee would be quite fair to send a few satoshis that might rot on hard drives forever, but such a policy should be coded and advertised by miners, not the main developers.  If anyone cares enough to do this, it will happen.

You invoked The Whitepaper, but I am not finding any place where it says arbitrarily small transaction values must be possible, certainly not to the level of detail of 1 satoshi.  In fact, Satoshi was here for the IsStandard() change to the client to only allow certain types of transactions.  How's that for censorship?  The same arguments raged in that thread, by the same (types of) people as today.  If restricting tiny payment values is the start of Bitcoin "going down", it already died years ago when an infinitude of possible payment scripts were censored in pretty much the exact same way as these values.

I can agree that this change could have had better transparency.  I do not believe the developers are changing it just to flex.  Whoever believes in allowing small transactions can band together and make it happen, at least as well as non-IsStandard() transactions are still happening today.  The fact that no pools are "stepping up" shows they are willing to let the developers set this policy for them, or can't be bothered at this early stage to make any announcements about it (the first release candidate with this change just barely came out, after all.)  That kind of apathy is what could kill bitcoin, not what defaults the developers set.

[grue]

Wow. It's the opposite. The market is smarter than any single human. It works like this:

http://www.youtube.com/watch?v=iOucwX7Z1HU

"invisible hand of the market"

this is what libertarians actually believe.