The problem with transaction fees

[ptd]

Consider a world where mining only pays out transaction fees. Almost all miners charge a transaction fee of t and all users pay a transaction fee of t on their transactions.

One miner decides to increase his profits by charging a smaller transaction fee. He publicly announces his intention and many users reduce their fee to be on par with the new fee he has announced. The miner increases his profits (because he processes more transactions) and the users save money. All other miners are forced to reduce their fees as well in order to make any transaction fees at all.

This process continually repeats itself until transaction fees are reduced to their smallest possible value and very little mining is done. This leaves the blockchain venerable. One solution is continue to pay out a block reward forever. What do people think?

[1715445755]

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[gigabytecoin]

This process continually repeats itself until transaction fees are reduced to their smallest possible value and very little mining is done. This leaves the blockchain venerable. One solution is continue to pay out a block reward forever. What do people think?

Yes, but this is not a problem. On the contrary, it is the magic of a truly free market at work. Thus benefiting the entire world with the lowest possible transaction fees. You should read "the wealth of nations" by Adam Smith to really understand what I just said.

One solution is continue to pay out a block reward forever. What do people think?

That is not a viable solution. It would completely ruin what Bitcoin currently is.

Keep reading the forums, there are lots of great posts about those topics in here!

[casascius]

Consider a world where mining only pays out transaction fees. Almost all miners charge a transaction fee of t and all users pay a transaction fee of t on their transactions.

One miner decides to increase his profits by charging a smaller transaction fee. He publicly announces his intention and many users reduce their fee to be on par with the new fee he has announced. The miner increases his profits (because he processes more transactions) and the users save money. All other miners are forced to reduce their fees as well in order to make any transaction fees at all.

This process continually repeats itself until transaction fees are reduced to their smallest possible value and very little mining is done. This leaves the blockchain venerable. One solution is continue to pay out a block reward forever. What do people think?

I agree that this is a problem.  This is a negative feedback loop.  I believe that mining for transaction fees is a non-equilibrium unsustainable solution that will lead to most people giving up mining because it's not worthwhile.  This is not "the free market at work", it's an example of "tragedy of the commons".

[BitLex]

I believe that mining for transaction fees is a non-equilibrium unsustainable solution that will lead to most people giving up mining because it's not worthwhile.

if most people give up mining, because it's not worthwhile, less people mine more blocks and get more fees in a shorter timeframe, what again makes it worthwhile to them.
i don't see a tragedy here.

[casascius]

I believe that mining for transaction fees is a non-equilibrium unsustainable solution that will lead to most people giving up mining because it's not worthwhile.

if most people give up mining, because it's not worthwhile, less people mine more blocks and get more fees in a shorter timeframe, what again makes it worthwhile to them.
i don't see a tragedy here.

Other than the strength of the network is depleted because of economic incentives to leave it.

Part of the recipe for making Bitcoin strong is a critical mass of mining.  An attacker must exceed the honest miners in CPU power to take over the network.  By giving most honest miners a reason to stop mining, as suggested by the OP the network is made vulnerable to takeover.

[ryepdx]

By giving most honest miners a reason to stop mining, as suggested by the OP the network is made vulnerable to takeover.

My thoughts exactly. The problem with free market theory, aside from assuming that people are rational actors who can be counted on to do what is in their own best interests, is that it does nothing to prevent crashes of things that can only afford to suffer one crash. I do not doubt that it would take only one hostile takeover of the bitcoin network to leave it in smoldering ashes, especially if that takeover occurs after bitcoins have reached a wide degree of acceptance.

A good way of handling this would be to have an agency (or two: this is the free market, after all) keep tabs on how much computing power needs to be in the network to keep bitcoins secure from various levels of attack. I do think that the majority of people are ethical and interested in doing what is best for them and those they are close to, so making known the state of the network as well as what, if anything, needs to be done to secure it, would probably be a good idea.

[Hal]

Consider a world where mining only pays out transaction fees. Almost all miners charge a transaction fee of t and all users pay a transaction fee of t on their transactions.

One miner decides to increase his profits by charging a smaller transaction fee. He publicly announces his intention and many users reduce their fee to be on par with the new fee he has announced.

If I post a transaction with a fee that would be accepted by only one miner, I will have to wait much longer for my transaction to get into a block. If he controlled 1% of the mining power, I'd have to wait for 100 blocks on average. That may not be attractive to many users.

[casascius]

If I post a transaction with a fee that would be accepted by only one miner, I will have to wait much longer for my transaction to get into a block. If he controlled 1% of the mining power, I'd have to wait for 100 blocks on average. That may not be attractive to many users.

How many miners would forego an additional personal gain for the good of the commons?  Especially when nobody is watching?  99%?  Forever?

I would be willing to bet far more than 1% would accept any transaction that came to them, either because they didn't understand how doing so ruined it for everyone else, or they just plain didn't care.

Expecting the mining community at large to follow a "transaction fee honor code" when nobody is watching is like expecting the populace to never cheat on their taxes when nobody is auditing.  It's just not likely to work for very long.  It's a non-self-sustaining, non-equilibrium scenario.

[caveden]

This problem has been discussed before. I agree it's tricky, and it also worries me a bit. This transaction fee thing does look like a tragedy of the commons.

One solution would be to have a maximum block size limit that automatically adjusts itself. It can be made so that it's always "tight", possibly pushing fees up. There's a thread for this: http://bitcointalk.org/index.php?topic=1865.0

I do worry not even that would be enough, though. I mean, I can easily imagine a scenario where the greatest majority of transactions (>95%) are not done on the block chain, precisely to avoid fees. Most people would use bank-like services for their transactions. Transactions between different banks could be dealt by them, for example, bank A has an account on bank B and vice-versa, and they transfer to these accounts, avoiding to use the block chain. They would only need a block chain transaction once in a while in order to transfer the balance. This could be done daily or even weekly, depending on the level of trust these institutions have on each other.

Anyway... we're discussing a scenario that will take long years to happen. Impossible to know what will be of bitcoin by then.

[ptd]

This process continually repeats itself until transaction fees are reduced to their smallest possible value and very little mining is done. This leaves the blockchain venerable. One solution is continue to pay out a block reward forever. What do people think?

Yes, but this is not a problem. On the contrary, it is the magic of a truly free market at work. Thus benefiting the entire world with the lowest possible transaction fees. You should read "the wealth of nations" by Adam Smith to really understand what I just said.

Indeed, the fact that transaction fees are eliminated by competition is not the problem. It's the fact that difficulty is also eliminated, it makes double spending attacks too easy.

One solution is continue to pay out a block reward forever. What do people think?

That is not a viable solution. It would completely ruin what Bitcoin currently is.

Note that keeping the block reward at 50 forever is not going to be a big problem. 50 btc will become a gradually smaller proportion of the total number of bitcoins until eventually it becomes equal to the rate of loss (which is going to be proportional to the total number of bitcoins in circulation).

Could you explain your thoughts more?

[ffe]

Consider a world where mining only pays out transaction fees. Almost all miners charge a transaction fee of t and all users pay a transaction fee of t on their transactions.

One miner decides to increase his profits by charging a smaller transaction fee. He publicly announces his intention and many users reduce their fee to be on par with the new fee he has announced.

If I post a transaction with a fee that would be accepted by only one miner, I will have to wait much longer for my transaction to get into a block. If he controlled 1% of the mining power, I'd have to wait for 100 blocks on average. That may not be attractive to many users.

I agree. In fact I assume there will be a range of offered fees and a range of miners accepting certain minimum fees resulting in a range of wait times for transactions to post.

[ffe]

This process continually repeats itself until transaction fees are reduced to their smallest possible value and very little mining is done. This leaves the blockchain venerable. One solution is continue to pay out a block reward forever. What do people think?

Yes, but this is not a problem. On the contrary, it is the magic of a truly free market at work. Thus benefiting the entire world with the lowest possible transaction fees. You should read "the wealth of nations" by Adam Smith to really understand what I just said.

Indeed, the fact that transaction fees are eliminated by competition is not the problem. It's the fact that difficulty is also eliminated, it makes double spending attacks too easy.

One solution is continue to pay out a block reward forever. What do people think?

That is not a viable solution. It would completely ruin what Bitcoin currently is.

Note that keeping the block reward at 50 forever is not going to be a big problem. 50 btc will become a gradually smaller proportion of the total number of bitcoins until eventually it becomes equal to the rate of loss (which is going to be proportional to the total number of bitcoins in circulation).

Could you explain your thoughts more?

My two cents worth; A reward of 50 charges everyone equally for the cost of making a new block (by debasing the currency a little). Now this may not "be a big problem" but why is it more fair than charging the creators of new transactions directly for the cost of those blocks in the form of a fee.

Think of the 50 coin reward in the early days as a reward for creating a small fraction of the β21M coins we want created. We all have an interest in making those and we all pay. Once the β21M coins are created I could care less if this guy's transaction goes in fast or slow. Let him pay for the service. I don't want my coins debased to pay for fast service for someone else.

[eMansipater]

You all seem to be forgetting the force that operates in the opposite direction--spam.  If bitcoin is at all successful, the number of free transactions will grow beyond the rate of overall processing and effectively force a minimum fee.  This minimum fee multiplied by the number of transactions in a block provides a hard bottom to mining income.  And no matter what it is, it will always have the vast majority of non-spam transactions being sent at that level.  The high load means that because of random spikes and valleys there is not a guarantee that paying the minimum fee will get your transaction in right away which means that miners within their own processing will always process the highest-fee transactions first.  So the paying-a-fee-to-get-priority doesn't rely on a set proportion of miners.  It works for all miners because who would not try to be the first to process the high fee transaction?

There are several other forces acting in the opposite direction to a tragedy of the commons, such as the fact that the cheaper transactions become the more transactions will be sent.  Or, if the difficulty falls too low it becomes a financial incentive for someone to load a lot of processing power into mining and set a fee for near-immediate processing.  For large enough markets these will all tend to keep difficulty too high to launch a cheap attack against.

As bitcoin gets bigger, though, we can start to be more intelligent about detecting double spend attempts as well.  Double spend attempts are actually quite obvious if you are looking for them, because they have to contain two separate, legit, signed transactions; they're only conceivably profitable for very large transactions; and unless the receiver is a fool the attacker has to "come from behind" after multiple blocks have already been generated.  This produces an incredibly distinct signature which could be used to increase the cost of a double-spend beyond a temporary 51% surge.

How and why?  Well, there is a financial incentive for a large mining operation to fight double-spend attacks because successful double-spends wipe out already mined blocks and thus cut into their profits.  So, a mining operation can temporarily bring in a "surge" of computing power at a slightly higher cost to fight off a double-spend attempt--merely having the power available means that it shouldn't have to be typically used so this isn't a huge overall cost compared to the security it provides the mining operation, and the surge still earns them blocks, just at a slightly narrower profit margin.

There are also other techniques that might be worthwhile in a simpler sense, because if double-spend attacks are feasible the value of bitcoins is impacted.  So, a miner which doesn't have access to extra computing power for the surge tactic can change its behaviour when detecting a double-spend attempt for this reason alone.  Rather than switching to the second chain as soon as it takes over, the miner could enact a "wait and see" strategy to prolong the length of time the double-spender must overpower the network and thus increase the cost of attack.  There would be particular incentive to do this if the miner had found a block in the chain that was being overtaken by the attacker.

tl;dr:Bitcoin has lots of room for expansion and toughening without changing the rules of the protocol.  The questions being raised are worth answering, but they don't present a significant threat to bitcoin itself, which is worth making a point of.

[kiba]

Some of your writing here could be turned into a worthy article for The Bitcoin Weekly. 

[eMansipater]

Some of your writing here could be turned into a worthy article for The Bitcoin Weekly. 

Just give me a topic .  I've done some professional writing before.

[mndrix]

This process continually repeats itself until transaction fees are reduced to their smallest possible value and very little mining is done.

Slight adjustment: Fees will be reduced to their smallest possible value and only very efficient mining is done.  Inefficient miners depart, efficient ones grow and the network is still strong.

Of course, block rewards for mining will continue for many years.  During that time, Bitcoin prices will remain the dominant factor in mining profitability.  It will be interesting to see how much prices move upward once the block reward drops to 25 coins.

[deadlizard]

so the fees fall and the proffesional miners leave then the difficulty falls until CPU mining is viable again and every client is able to collect fees and the network becomes P2P again until the proffesionals realise they can make a quick buck by rowing the difficulty. entering during low difficulty and leaving when the difficulty rises.

[FreeMoney]

I think there is a problem, but it hasn't been precisely identified.

Think about what is valuable that you get for free. Obviously for now transactions are being paid for by new coins. In the future a fee will be paid, but this fee you pay is for your first confirmation only. The second, third, fourth confirmations are valuable, but free. This is odd. Another valuable-but-free thing is having other miners build off of blocks that you have found.

I am pretty sure that in the future miners will 'forward' part of their fees to anyone who builds off of their blocks. This will also have the effect of spreading received fees over the multiple confirmations that a transactor wishes to 'buy'.

If there is a clean way to do this (and I think there is) then it will take care of this "commons" problem.

[Syke]

Consider a world where mining only pays out transaction fees. Almost all miners charge a transaction fee of t and all users pay a transaction fee of t on their transactions.

Stop right there. First, miners don't charge fees. They either include txs or they don't.

One miner decides to increase his profits by charging a smaller transaction fee.

For this to even be possible, there would have to be so many txs that they don't all fit in a block. That would be thousands of txs every 10 minutes. That is in the very distant future. And again, miners don't charge fees. If there are so many txs that they don't all fit in a block, they'll just pick the txs with the largest fees. This "smaller transaction fee" situation makes no sense.

[ptd]

Consider a world where mining only pays out transaction fees. Almost all miners charge a transaction fee of t and all users pay a transaction fee of t on their transactions.

Stop right there. First, miners don't charge fees. They either include txs or they don't.

One miner decides to increase his profits by charging a smaller transaction fee.

For this to even be possible, there would have to be so many txs that they don't all fit in a block. That would be thousands of txs every 10 minutes. That is in the very distant future. And again, miners don't charge fees. If there are so many txs that they don't all fit in a block, they'll just pick the txs with the largest fees. This "smaller transaction fee" situation makes no sense.

Suppose I run a miner that only includes transactions that contain at least a 0.01 btc fee, regardless of what is already in the block. That is "charging a fee".

[marcus_of_augustus]

(Posted on other thread first but more pertinent here).


Current coins in circulation 5.7mill, average 24hr transactions around 200-250K ... or about 1500BTC per block.
http://www.bitcoinwatch.com/
with current exchange rates to "real world" monies that people use to buy mining gear and electricity with it is currently profitable on 50 BTC per block.

So extrapolating out to 21mill BTC in circulation, with similar money velocity as now, is about 800-850K per 24hr, or about 5700 BTC per block on a rolling average. Interestingly, if you assume a sensible round number average fee of 1% you get 57BTC per block for fees in the mature bitcoin economy .... hmmmm.

Recall that due to the deflationary nature of the beast, and the divisibility (2.1e15 satoshis), 800K BTC per day in transactions could represent the combined wealth transfers and economic activity of who knows how many millions of people. So that even a 0.01% average fee (6BTC per block) may easily incentivise quite substantial future mining rigs.

[caveden]

One solution would be to have a maximum block size limit that automatically adjusts itself. It can be made so that it's always "tight", possibly pushing fees up. There's a thread for this: http://bitcointalk.org/index.php?topic=1865.0

Another solution would be to leave solving this problem to the miners, instead of trying to impose layer upon layer of "community generated red tape". What a bunch of control freaks...  

The block maximum size is not only a "miners problem", it's the whole system, since it's a criterion that says whether a block is valid or not.
And this constant will probably have to change one day, if we want this project to scale. And such change will be backward incompatible. And as always, it's damn difficult to organize a backward incompatible change after your protocol has evolved enough to have multiple clients everywhere.

If this backward incompatible change will have to be done one day, why not make it only once (by setting an automatic adjustment rule), and why not considering making it now, while it's still easy?

It's not related with transaction fees only, it's related to the scalability of the bitcoin network as well.

[Gavin Andresen]

If this backward incompatible change will have to be done one day, why not make it only once (by setting an automatic adjustment rule), and why not considering making it now, while it's still easy?

Patches welcome.

But be aware that any patch that is vulnerable to denial-of-service attacks will be rejected, and I can't think of a way to automatically adjust the block size that wouldn't be vulnerable to some big, anti-social miner (think "jerk with a botnet") deciding it would be fun to artificially drive up transaction volume, drive up the block size, and create a few gigabytes of worthless blocks we all get to download forevermore.

When we get close to bumping into the block size limitation it will be easy to convince a majority of the network to upgrade-- that's one problem that is obvious and easy to fix.

[twobitcoins]

But be aware that any patch that is vulnerable to denial-of-service attacks will be rejected, and I can't think of a way to automatically adjust the block size that wouldn't be vulnerable to some big, anti-social miner (think "jerk with a botnet") deciding it would be fun to artificially drive up transaction volume, drive up the block size, and create a few gigabytes of worthless blocks we all get to download forevermore.

We already assume no attacker has 50% of the computing power.  If we choose an adjustment rule based on median block size, it should be immune from that type of attack.

[caveden]

If this backward incompatible change will have to be done one day, why not make it only once (by setting an automatic adjustment rule), and why not considering making it now, while it's still easy?

Patches welcome.

Great, now I only need to relearn C++!

Sorry, no patches coming from me... but I'm glad you are open for it.

But be aware that any patch that is vulnerable to denial-of-service attacks will be rejected, and I can't think of a way to automatically adjust the block size that wouldn't be vulnerable to some big, anti-social miner (think "jerk with a botnet") deciding it would be fun to artificially drive up transaction volume, drive up the block size, and create a few gigabytes of worthless blocks we all get to download forevermore.

For the jerk with a botnet to succeed with this he would need to either pay lot of transaction fees to include spam transactions in everybody's else blocks, or make the spam blocks himself.

If he's paying, well, miners are getting properly rewarded, the jerk is not a jerk anymore, he's rather an impulsive consumer of miners services. Miners will probably make him pay whatever they need in order to sustain such irrational demand.
Honestly, I don't see this happening.

Now, for him to make it on his own, he would need an immense amount of computing power. Having more than 50% of the network is already a way more dangerous thing than spamming, so let's assume he's not that strong.
Let's say that he has something like 25% of total power, which is already a lot.
He could act in two ways:

Stupid jerk mode: He fills all his blocks with spam, refusing everybody else's transactions. This is stupid because he'd be wasting money, by refusing to accept the transaction fees from others. I suppose people running botnets are not that stupid, but sill, what could the stupid spammer do?
Let's suppose the network is already running with a block size limit of 110% of the average needed. Now, the jerk occupies 25% of the space with garbage, forcing all transactions to be in the remaining 75%. That should be 82,5% of the needed space, so such space will get filled and the block size limit will increase. But how much should it increase? It would stop increasing as long as the 75% space not occupied by the spammer is 110% of what is needed. If I'm not lost in the numbers already, this super-spammer with limited intellect would make the block size limit around 144% (one third + 10%) of what it would need to be.
Anyway, what I want to say is that is that the relative damage he could cause is proportional and limited to the computing power he has, since as soon as all transactions are fitting in the space the spammer does not control, the bock size limit would stop growing. (I probably made some mistakes in the numbers above, but I hope you get the picture)
Having 25% is already a lot, and the relative damage for this stupid-mode is not that great.

By picking an arbitrary constant too much higher than the actual needs of the network, we'd probably be giving spammers much more space to spam. Actually, right now, with this 500Kb limit, a spammer with all this power could probably do much more relative damage, making the network download much more than it would need to.

Now, assuming that the spammer is not that stupid and he accepts paying transactions into his blocks, that greatly decreases the relative harm. Actually, his blocks would contain around 10% of spam only, the rest would be true transactions. He would barely move the block size limit, even with a great computing power.

When we get close to bumping into the block size limitation it will be easy to convince a majority of the network to upgrade-- that's one problem that is obvious and easy to fix.

I hope you're right on that. Nevertheless, consider what I said above: a high constant gives spammers much more opportunity, and risks not creating a sufficient artificial scarcity to incentive mining and thus weakening the network. And a low constant would require frequent backward incompatible changes.

[caveden]

But be aware that any patch that is vulnerable to denial-of-service attacks will be rejected, and I can't think of a way to automatically adjust the block size that wouldn't be vulnerable to some big, anti-social miner (think "jerk with a botnet") deciding it would be fun to artificially drive up transaction volume, drive up the block size, and create a few gigabytes of worthless blocks we all get to download forevermore.

We already assume no attacker has 50% of the computing power.  If we choose an adjustment rule based on median block size, it should be immune from that type of attack.

That's pretty much the tl;dr version of my previous post.

[casascius]

But be aware that any patch that is vulnerable to denial-of-service attacks will be rejected, and I can't think of a way to automatically adjust the block size that wouldn't be vulnerable to some big, anti-social miner (think "jerk with a botnet") deciding it would be fun to artificially drive up transaction volume, drive up the block size, and create a few gigabytes of worthless blocks we all get to download forevermore.

I almost would welcome the jerk - the jerk would help us make the network strong while the window of opportunity is as open as it's ever going to be.  The jerk would be doing us a favor.  He should be charging for the favor.  It's a "stress test".  Everyone knows the current version is non-scalable and will HAVE to be fixed.  So why not fix it sooner than later?

Just like the jerk who exploited an overflow bug in 0.3.9.  We're now stronger because of it.  It was far easier to get a few early adopters to upgrade, than a mass of five million users.

There is a huge amount of non-consensus as to what will happen when the going gets tough.  It would be far better for the longevity of the system to have it happen experimentally than have it turn off a whole influx of users.

A jerk who spams our block chain may very well give us the motivation to start working on scalability promoters like making blocks prunable, or allowing people to run "full nodes" versus "minimal nodes" etc.

No matter how much spam one jerk can produce, real transaction volume is eventually going to eclipse it... that is, if the system will scale to support it.

[MoonShadow]

What about keeping the hard limit, but adding an occasional exemption, say every retarget block can be as large as necessary to clear the backlog. (or ten times as large, or 100 times, whatever)  That way, the longest delay that a cheap/free transaction is a couple weeks, and the clients without much bandwidth only has to deal with an oversized block occasionally and on a predictable schedule.

This way. the near term scarcity that would drive transaction fees in the future would still be present, and donations won't languish to unrealistic terms.

[deadlizard]

But be aware that any patch that is vulnerable to denial-of-service attacks will be rejected, and I can't think of a way to automatically adjust the block size that wouldn't be vulnerable to some big, anti-social miner (think "jerk with a botnet") deciding it would be fun to artificially drive up transaction volume, drive up the block size, and create a few gigabytes of worthless blocks we all get to download forevermore.

We already assume no attacker has 50% of the computing power.  If we choose an adjustment rule based on median block size, it should be immune from that type of attack.

At this point that is not a safe assumption.

O.K lets do the math
Network total - 0.506 Thash/s  = 506Ghash/s = 50600Mhash/s  / 600 = 85 (5970 cards) * 699 (RRP) = $59415 / 2 = 50% of the computing power of the network would cost $29707.50

I forgot where I was going with this ... oh right, I'm sure ATI sold a few more than 85 "5970" cards so it's deffinetly not a safe assumption.

[casascius]

O.K lets do the math
Network total - 0.506 Thash/s  = 506Ghash/s = 50600Mhash/s  / 600 = 85 (5970 cards) * 699 (RRP) = $59415 / 2 = 50% of the computing power of the network would cost $29707.50

I forgot where I was going with this ... oh right, I'm sure ATI sold a few more than 85 "5970" cards so it's deffinetly not a safe assumption.

506 GHash/s != 50600Mhash/s

Off by a factor of 10

[marcus_of_augustus]

Would someone mind specifying the 'max block size' limitation is tight, well-defined systematic way? Is there a link to the problem definition, e.g. bug report?

I'm getting the gist of it only through the passing comments but hard to get a grasp on the complete animal that way.

[Jim Hyslop]

O.K lets do the math
Network total - 0.506 Thash/s  = 506Ghash/s = 50600Mhash/s  / 600 = 85 (5970 cards) * 699 (RRP) = $59415 / 2 = 50% of the computing power of the network would cost $29707.50

Leaving aside the factor-of-10 error pointed out by cassacius, wouldn't an attacker have to double to size of the network in order to control 50% of it?

In other words, suppose the current hash power of the network is xMhash/s. If the attacker adds 2 / x Mhash/s, then the total network power is 1.5x, and the attacker controls 0.5x, or 1/3 of the network.

[MoonShadow]

O.K lets do the math
Network total - 0.506 Thash/s  = 506Ghash/s = 50600Mhash/s  / 600 = 85 (5970 cards) * 699 (RRP) = $59415 / 2 = 50% of the computing power of the network would cost $29707.50

Leaving aside the factor-of-10 error pointed out by cassacius, wouldn't an attacker have to double to size of the network in order to control 50% of it?

In other words, suppose the current hash power of the network is xMhash/s. If the attacker adds 2 / x Mhash/s, then the total network power is 1.5x, and the attacker controls 0.5x, or 1/3 of the network.

Yes.

[MoonShadow]

Would someone mind specifying the 'max block size' limitation is tight, well-defined systematic way? Is there a link to the problem definition, e.g. bug report?

I'm getting the gist of it only through the passing comments but hard to get a grasp on the complete animal that way.

The max block size is currently a hard limit of one megabyte.  The current fee structure is designed to make hitting that limit prohibitively expensive, by limiting the free transaction section (to 20 kilobytes, I believe) and an exponentially increasing set of required fees for transactions to be included above certain arbitrary soft limits.  I don't recall the actual fee schedule, but a block larger than half a megabyte would be very profitable for the miner that solved it.

[sdmaxx]

It is true that the current BTC transaction fee depends on the actions of miners at the time and the system volatility at the moment in BTC netowrk, currently BTC transaction fee is floating around $10-$16 which is not a reasonable fee for low amount transactions. This might decrease the people' s interest on BTC transactions and that may affect for decreasing the demand for BTC. This might affect very badly for BTC network and total crypto world as BTC is the king in the crypto world !

Thanks

[kiver]

i really think your idea of the miners lowering their transactions will sure increase there profits because the amount of transactions on bitcoin blockchain will increase which will benefit them more than two or three transactions on a high fee price bitcoin became more like an asset you keep these days i self dont make a small transactions with due to the high fee price since there alot of good altcoin with a low fee price and fast network which you can pay with , without any troubles i hope miners would listen to the voice of logic and start acting toward that idea which will benefit the miners and the users ...

[mysacrifice]

It is true that the current BTC transaction fee depends on the actions of miners at the time and the system volatility at the moment in BTC netowrk, currently BTC transaction fee is floating around $10-$16 which is not a reasonable fee for low amount transactions. This might decrease the people' s interest on BTC transactions and that may affect for decreasing the demand for BTC. This might affect very badly for BTC network and total crypto world as BTC is the king in the crypto world !

Thanks

That is the biggest problem of bitcoin actually and I am afraid it is effecting its own future. Many people including me is just using alt coins (at least top ones) to transfer money as btc's transaction fee is becoming unreasonable day by day.

[bitfools]

But be aware that any patch that is vulnerable to denial-of-service attacks will be rejected, and I can't think of a way to automatically adjust the block size that wouldn't be vulnerable to some big, anti-social miner (think "jerk with a botnet") deciding it would be fun to artificially drive up transaction volume, drive up the block size, and create a few gigabytes of worthless blocks we all get to download forevermore.

I almost would welcome the jerk - the jerk would help us make the network strong while the window of opportunity is as open as it's ever going to be.  The jerk would be doing us a favor.  He should be charging for the favor.  It's a "stress test".  Everyone knows the current version is non-scalable and will HAVE to be fixed.  So why not fix it sooner than later?

Just like the jerk who exploited an overflow bug in 0.3.9.  We're now stronger because of it.  It was far easier to get a few early adopters to upgrade, than a mass of five million users.

There is a huge amount of non-consensus as to what will happen when the going gets tough.  It would be far better for the longevity of the system to have it happen experimentally than have it turn off a whole influx of users.

A jerk who spams our block chain may very well give us the motivation to start working on scalability promoters like making blocks prunable, or allowing people to run "full nodes" versus "minimal nodes" etc.

No matter how much spam one jerk can produce, real transaction volume is eventually going to eclipse it... that is, if the system will scale to support it.

there are 10k jerks a minute pounding btc right now and you know it, the fact that there are so few failrures and complaints of lost coin is amazing,

u already have the 'bch' fork which never met a mod it didn't like, and then core is conservative, but everybody is hell-bent on breaking core, what happened to if it ain't broken, don't fix it?

problem is u all try to make all things to all people, btc will never scale to be a day-trading platform for ever 2bit jackass on earth to buy/sell 0.0001 btc orders every millisecond, it would be far better to just let the trading exchanges churn that shit and take a cut on the thrash, as the house always wins,

also this notion that every toilet in India/China/Africa should charge BTC for the 1cent shit and that be a transaction, again they already have that in those country's and its called the cell-phone credit ( a form of crypt cash )

BITCOIN is a bank for rich techies, live with it, and then for those not to lazy to have made the +2,000 BTC forks from the orginal code, then there too you can create your 'master-piece', the problem is that u want stuff to scale and run like ORACLE, then the problem is you need a Larry Ellision to run Oracle, and now it ain't BITCOIN anymore, its NSA;

NSA uses Oracle for their database Ellision wouldn't be a billionaire if not for his CIA-NSA biz, and same reason here big demand to scale up bitcoin so it be the NWO currency, but then again, it wouldn't be BITCOIN anymore if it were run by GOV & VISA asshols

Then in time of course GAVIN and all the 'founders' decide its time that they become the next BILL-GATES of BITCOIN, so then its no longer everybody is a equal node, its a few guys aer TRILLOINAIRES and everybody else is a muppet

[Kakmakr]

This could have worked, if the miner with the lowest fees, would have been able to handle all the transactions coming their way. Unfortunately that kind of hashing power would not be possible, and this is why the load is spread over several pools.

If you change it a little bit, say miners X with the lowest fee is at capacity, then the tx's goes to Miner Y, with the second highest miners fees etc. etc. This would make things very interresting.

The problem will occur, where some miners will be priced out of the mining scene, because they will be unable to compete with the bigger miners with the low fees.

[markleal]

Consider a world where mining only pays out transaction fees. Almost all miners charge a transaction fee of t and all users pay a transaction fee of t on their transactions.

One miner decides to increase his profits by charging a smaller transaction fee. He publicly announces his intention and many users reduce their fee to be on par with the new fee he has announced. The miner increases his profits (because he processes more transactions) and the users save money. All other miners are forced to reduce their fees as well in order to make any transaction fees at all.

This process continually repeats itself until transaction fees are reduced to their smallest possible value and very little mining is done. This leaves the blockchain venerable. One solution is continue to pay out a block reward forever. What do people think?

Hi there ptd! Those transaction fee is really a pain in the ass. The solution you said is quite possible, but I just wondering how those thousand of miners could possibly do that. As far as I know, most of the miners are independent, meaning there is no one who could control their decision in terms of those transaction fees. That is one of the reason government want to step into the system to create a regulation about pricing. But most of us, can’t determine if it could produce a positive or a more negative effect. 

[bitfocus]

I guess Huge Bitcoin Fees will drop now and that would be a relief to the Bitcoiners https://www.bitcoinmarketinsider.com/mainnet-lightning-payments-drops-bitcoin-fees-near-zero/

[icoprofits]

bitcoin transactions fees especially blockchain.info is charging more rather than other wallets and they are lot of confirmed transactions as well

[bman01]

The transaction fee for mining makes sense to some extent, but still it is frustrating to wait for some time. The problems with the transaction fee are yet unsolved and let’s see what happens with it.

[Deepiefface10]

Miners win more than before they will destroy bitcoin if they keep doing like this.
No one ready to pay 20$ to send 30$ it’s too high.

[ahmad21]

Consider a world where mining only pays out transaction fees. Almost all miners charge a transaction fee of t and all users pay a transaction fee of t on their transactions.

One miner decides to increase his profits by charging a smaller transaction fee. He publicly announces his intention and many users reduce their fee to be on par with the new fee he has announced. The miner increases his profits (because he processes more transactions) and the users save money. All other miners are forced to reduce their fees as well in order to make any transaction fees at all.

This process continually repeats itself until transaction fees are reduced to their smallest possible value and very little mining is done. This leaves the blockchain venerable. One solution is continue to pay out a block reward forever. What do people think?

Yes ofcourse it is an absolutely feasible option at our end. But the problem comes on the end of the miners. Lets imagine if one of them decides to lower the fees but the problem is the extent to which he can  lower it. We all very well know that he will keep certain profits as to meet his expenses and keep something for him.

I guess Huge Bitcoin Fees will drop now and that would be a relief to the Bitcoiners https://www.bitcoinmarketinsider.com/mainnet-lightning-payments-drops-bitcoin-fees-near-zero/

When do you possibly see the expansion of lightning network to all our wallets?

[Deepiefface10]

woow that’s happen after 6 year. many miners ask for unacceptable fee.
more than normal fee, more than electric bill and fast rich for them

[DeadCoin]

woow that’s happen after 6 year. many miners ask for unacceptable fee.
more than normal fee, more than electric bill and fast rich for them

Almost past 4 weeks have been worst. The fees are too high. No worries. More the investment comes in, adaption starts then obviously the fees may hit the floor..  Let's wait. Now the rate starts resuming back to normal. Once the banning of traders completes in Korea, we would see a better situation in BTC price as well as in transaction fees.

[tarvizlisar]

Bitcoin users currently are paying around $28 on average just to make transactions using the digital currency, according to information released by BitInfoCharts. Transaction Fees has Continue to destroy the Bitcoin Network.

[Anti-Cen]

We can afford fees if we only had the 1,000 or less miners we need to keep the network running
but we cannot afford the 20,000 miners we currently have because we don't have that much cream
to go around and we need to cull the numbers down.

51% attack is clap trap and anyone that builds a financial system based on this principle should
call it a day and seek new employment and was the Bitcoin development team not to be filling it's
pockets then they just need to add this line of code the the core project if they didn't have the
brains to do it in the first place

public static money MaxFee = 1.50 // 20,000 miners processing only 7 transactions a second needed to end yesterday

That will fix $25 rip-off fees and stop the Bitcoin price from falling even more but if you think Lightning
is not just a network of banks that are calling hubs being added to Bitcoin then you best watch this video
to the end and note that the presenter is pro-bit coin

https://www.youtube.com/watch?v=MpfvhiqFw7A

Others are more to the point

https://www.youtube.com/watch?v=_TXduhKbe-c

[JosephStalin]

The problem with transaction fees is also a problem of scalability. Bitcoin as it is now, dies not work as a currency. Full stop. Something will have to change, or else.

[jseverson]

woow that’s happen after 6 year. many miners ask for unacceptable fee.
more than normal fee, more than electric bill and fast rich for them

Almost past 4 weeks have been worst. The fees are too high. No worries. More the investment comes in, adaption starts then obviously the fees may hit the floor..  Let's wait. Now the rate starts resuming back to normal. Once the banning of traders completes in Korea, we would see a better situation in BTC price as well as in transaction fees.

How would increased adoption help the fee situation? I see it the other way around. Heck, the reason why the fees are so high right now is probably due to increased adoption, with the entire world talking about Bitcoin towards the end of 2017. This is a manifestation of the scalability problem.

Korea is one of the largest cryptocurrency markets, so I don't think a ban there would do Bitcoin price any favors (and it turns out there are no immediate plans for a ban anyway). The transaction fees may decrease though, because you're essentially eliminating an entire market from contributing to the transaction backlog.

[szpalata]

Bitcoin users currently are paying around $28 on average just to make transactions using the digital currency, according to information released by BitInfoCharts. Transaction Fees has Continue to destroy the Bitcoin Network.

The fees are currently getting out of hand and something needs to be done because i pay almost 20$ or more on each transaction and that's huge by my standards and so i agree with you that the huge fees are destroying or might destroy the bitcoin network.

[btcluisdiki]

Bitcoin users currently are paying around $28 on average just to make transactions using the digital currency, according to information released by BitInfoCharts. Transaction Fees has Continue to destroy the Bitcoin Network.

The fees are currently getting out of hand and something needs to be done because i pay almost 20$ or more on each transaction and that's huge by my standards and so i agree with you that the huge fees are destroying or might destroy the bitcoin network.

Bitcoin transaction fees could probably becomes high since there are many transactions that are competing each other as to which can get there first and this is just one of the many reasons. But for those bitcoin loyal users, they consider this as a temporary problem since there will be a solution soon in the future. This will be expected that all the networks should withstand the demand in the market.

[Lancusters]

Bitcoin users currently are paying around $28 on average just to make transactions using the digital currency, according to information released by BitInfoCharts. Transaction Fees has Continue to destroy the Bitcoin Network.

The fees are currently getting out of hand and something needs to be done because i pay almost 20$ or more on each transaction and that's huge by my standards and so i agree with you that the huge fees are destroying or might destroy the bitcoin network.

A big fee per transaction this is certainly a problem. But you will agree with me that nobody uses bitcoins for small purchases. The users themselves are to blame for what has turned bitcoin into an asset for savings. When your savings in bitcoin increase in price by a few hundred dollars you're not outraged. The miners do not want to stay away from income. All is fair.

[maianh09]

Consider a world where mining only pays out transaction fees. Almost all miners charge a transaction fee of t and all users pay a transaction fee of t on their transactions.

One miner decides to increase his profits by charging a smaller transaction fee. He publicly announces his intention and many users reduce their fee to be on par with the new fee he has announced. The miner increases his profits (because he processes more transactions) and the users save money. All other miners are forced to reduce their fees as well in order to make any transaction fees at all.

This process continually repeats itself until transaction fees are reduced to their smallest possible value and very little mining is done. This leaves the blockchain venerable. One solution is continue to pay out a block reward forever. What do people think?

There are many accepting a transaction fee to be able to complete their transaction block. And precious miner prioritizes high fee transaction for execution. That is why the price for each sale is usually high.

[missycoin]

Story sounds like a story of bitcoin  Fees are getting bigger and bigger and the whole point of bitcoin disappears with it.

[Images21]

Miners win more than before they will destroy bitcoin if they keep doing like this.
No one ready to pay 20$ to send 30$ it’s too high.

Definitely. This is way too much. Transaction fees, the almost unbelievable transactions fees, will really be a big reason why a lot of people who are fans of Bitcoin will not be spending it. I for one will be spending only a little. I only save the biggest portion for hodling. I know that even though this is the case Bitcoin will still grow bigger.

[Red-Apple]

Story sounds like a story of bitcoin  Fees are getting bigger and bigger and the whole point of bitcoin disappears with it.

the "whole point of bitcoin" was to be a decentralized currency and it is still a decentralized currency only with higher fees. it has not disappeared, it just is in a rough patch at the moment.