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Author Topic: Block reward <1 btc re-orgs vector viable? Eg Binance  (Read 434 times)
jubalix
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May 08, 2019, 10:33:13 PM
 #1

How will Re-orgs be stopped by financial incentive when the on-chain blocksize is to small even when full and your only geting 1 or say 1/4 of a btc per block rewards?

Without onchain blocksize increase the network becomes more vulnerable to re - orgs by financial insentive.

Eg

hack of $300M or some such large number.

miners only getting 0.25 btc a block and fees which will be limited in number by blocksize

So if you get
[1] a "HACK"
[2] BTC price drops a lot
[3] Block reward is very low

then you have removed large barrier's to an actors ability to bribe miners to re-org and thus destroy credibility of the BTC network.


Does this not force you to have larger blocks to get enough fees to defend this case?

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May 08, 2019, 10:53:51 PM
Merited by d5000 (1), ETFbitcoin (1), mikeywith (1)
 #2

Does this not force you to have larger blocks to get enough fees to defend this case?

With larger blocks there is no incentive for people to increase their fee to get confirmed faster since there is ample space in each block. Also, you are making the assumption that bigger blocks are going to increase the number of transactions by an equal amount. Chances are good that the amount of fee a miner could get from a 512 mega WU block will be lower than what they would get with a 4 mega WU block.
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May 09, 2019, 02:14:39 AM
 #3

Does this not force you to have larger blocks to get enough fees to defend this case?

With larger blocks there is no incentive for people to increase their fee to get confirmed faster since there is ample space in each block. Also, you are making the assumption that bigger blocks are going to increase the number of transactions by an equal amount. Chances are good that the amount of fee a miner could get from a 512 mega WU block will be lower than what they would get with a 4 mega WU block.


You left out the "more  incentive for people to increase use" on chain.

Lets say 4 x X vs X, so thats 4 times as much at 1/2 say half the amount, would I believe give double the rewards.





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May 09, 2019, 02:32:48 AM
 #4

Does this not force you to have larger blocks to get enough fees to defend this case?

With larger blocks there is no incentive for people to increase their fee to get confirmed faster since there is ample space in each block. Also, you are making the assumption that bigger blocks are going to increase the number of transactions by an equal amount. Chances are good that the amount of fee a miner could get from a 512 mega WU block will be lower than what they would get with a 4 mega WU block.


You left out the "more  incentive for people to increase use" on chain.

Lets say 4 x X vs X, so thats 4 times as much at 1/2 say half the amount, would I believe give double the rewards.



Most altcoins already have implemented increased block space. However, the only alt that I know that comes close to the level of BTC transactions is ETH. The only reason ETH has more transactions is because it has a use case to pump out shit tokens for a bazillion ICOs. I don't see how increasing block space will somehow magically make people want to transact more on the BTC chain. Besides, it will be 9 years before the block reward will be 1.5625 bitcoins. We have no idea what the market value of a Bitcoin will be then. However, with a limited supply, I suspect that the block reward alone will be worth the while for miners anyway, especially since I am sure they will develop even more efficient ASICs in 9 years time.
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May 09, 2019, 02:45:11 AM
Last edit: May 09, 2019, 03:05:46 AM by d5000
Merited by jubalix (2), pooya87 (2), bones261 (2), ETFbitcoin (1)
 #5

I just discussed a similar issue in the German forum, but others convinced me that the scenario is not that dangerous. The reason was this paper: the authors argue that when fees become more important than block rewards, the chain becomes unstable and attacks would be cheaper.

But Bitcoin's security relies on the assumption that the miners responsible for 50% of the hashrate are honest. Even if more than 50% are dishonest, then there still the security model does not collapse, as the dishonest majority must preserve their advantage over a long time to be able to censor transactions, double spend and to do really severe harm.

There are incentives in place that this doesn't happen:
- First, the price would most likely crash, so miners' income would be drastically less. They could short coins to hedge against that, but that would have to be an extremely massive operation and certainly would drive up the price for borrowed Bitcoins.
- Second, the community could decide to hard fork with another mining algorithm, reverting the double spends. In this case, most users would switch to the new chain, and miners would lose not only the rewards they didn't convert to fiat, but almost all of their investment in hardware and infrastructure (they could mine the old chain and lesser SHA256 coins, but their income from these sources would be worth only a little fraction of the amount they achieved with Bitcoin).

In the "bribing attack" scenario, the general situation would be very similar to that of a "regular" 51% attack, because the hacker must convince a majority of miners to take these two risks related to dishonest behaviour. It may be a little bit cheaper, but not really so significantly that the situation would be likely to happen.

So the hack must be really an extremely big one (e.g. Satoshi's coins) for the hacker to be able to really do harm in this case.

Anyway, I also agree with bones261: bigger blocks would not necessarily mean "more fees". Second-layer technologies could even lead to more transactions than big blocks, and thus to more demand, and higher fees.

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May 09, 2019, 06:07:27 AM
Last edit: May 09, 2019, 08:43:54 AM by mda
 #6

I don't see another way out of this situation.
https://bitcointalk.org/index.php?topic=5109561
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May 09, 2019, 12:46:39 PM
 #7

Does this not force you to have larger blocks to get enough fees to defend this case?

With larger blocks there is no incentive for people to increase their fee to get confirmed faster since there is ample space in each block. Also, you are making the assumption that bigger blocks are going to increase the number of transactions by an equal amount. Chances are good that the amount of fee a miner could get from a 512 mega WU block will be lower than what they would get with a 4 mega WU block.


You left out the "more  incentive for people to increase use" on chain.

Lets say 4 x X vs X, so thats 4 times as much at 1/2 say half the amount, would I believe give double the rewards.



Most altcoins already have implemented increased block space. However, the only alt that I know that comes close to the level of BTC transactions is ETH. The only reason ETH has more transactions is because it has a use case to pump out shit tokens for a bazillion ICOs. I don't see how increasing block space will somehow magically make people want to transact more on the BTC chain. Besides, it will be 9 years before the block reward will be 1.5625 bitcoins. We have no idea what the market value of a Bitcoin will be then. However, with a limited supply, I suspect that the block reward alone will be worth the while for miners anyway, especially since I am sure they will develop even more efficient ASICs in 9 years time.

ok, alts don't matter when BTC is at the front. Tran actions have capped out in BTC and its holding back adoption.

More efficient asics don't mean anything as the whole market gets them and they change nothing in relation to fees for support or attack vector



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May 09, 2019, 12:51:37 PM
Last edit: May 13, 2019, 02:51:58 PM by jubalix
 #8



There are incentives in place that this doesn't happen:
- First, the price would most likely crash, so miners' income would be drastically less. They could short coins to hedge against that, but that would have to be an extremely massive operation and certainly would drive up the price for borrowed Bitcoins.
- Second, the community could decide to hard fork with another mining algorithm, reverting the double spends. In this case, most users would switch to the new chain, and miners would lose not only the rewards they didn't convert to fiat, but almost all of their investment in hardware and infrastructure (they could mine the old chain and lesser SHA256 coins, but their income from these sources would be worth only a little fraction of the amount they achieved with Bitcoin).

In the "bribing attack" scenario, the general situation would be very similar to that of a "regular" 51% attack, because the hacker must convince a majority of miners to take these two risks related to dishonest behaviour. It may be a little bit cheaper, but not really so significantly that the situation would be likely to happen.

So the hack must be really an extremely big one (e.g. Satoshi's coins) for the hacker to be able to really do harm in this case.

Anyway, I also agree with bones261: bigger blocks would not necessarily mean "more fees". Second-layer technologies could even lead to more transactions than big blocks, and thus to more demand, and higher fees.

[1] Does not matter to a malicous attacker, eg short btc 50x on bitmex or whatever, or govt or corp or whatever

[2] Does not change anything as the incentive system just means [1] again happens.


There is not reason not 2 2x blocksize now.

I think core is politically wed to 1mb, because if the increase blksize it admits defeat to BCH and BSV

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May 09, 2019, 01:41:03 PM
Merited by ETFbitcoin (1)
 #9

I think core it politically wed to 1mb, because if the increase blksize it admits defeat to BCH and BSV

Blocksize has already been increased to 4000000WU with 1 byte non-segwit data = 4WU and 1 byte segwit-data = 1WU. Most of blocks are superior to 1mb in size nowadays : https://blockstream.info/, https://www.blockchain.com/charts/avg-block-size, https://btc.chaintools.io/ .

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May 09, 2019, 06:19:38 PM
 #10


ok, alts don't matter when BTC is at the front. Tran actions have capped out in BTC and its holding back adoption.

More efficient asics don't mean anything as the whole market gets them and they change nothing in relation to fees for support or attack vector


     I don't see any evidence that increased transaction capacity for crytocurrency necessarily leads to increased adoption. If that were the case, I would think many more people would have supported the BCH fork and then went on to support the BCH-SV fork. It appears that the only time those two forks can hope to get anywhere near their capacity is when they do a stress test. Also, a reorg bribe would probably be much cheaper and have a greater chance of working on those two coins since their average hash rate is pale in comparison to BTC. You would probably only need to bribe one large ASIC farm to go forward with a reorg of either of those chains.

    Also, as darosior stated above, when segwit was implemented, it already increased the block capacity, basically because the segwit signatures are kept in a separate location. I don't see why the Bitcoin Core team cannot increase the block capacity even further through optimizations or perhaps moving other data to separate locations. Furthermore, since they will probably do this as a soft fork, if people don't like the new improvements, they are free to use the older software and still be able to participate in the network.
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May 09, 2019, 06:59:40 PM
Merited by jubalix (1)
 #11

How will Re-orgs be stopped by financial incentive when the on-chain blocksize is to small even when full and your only geting 1 or say 1/4 of a btc per block rewards?

Without onchain blocksize increase the network becomes more vulnerable to re - orgs by financial insentive.

Eg

hack of $300M or some such large number.

miners only getting 0.25 btc a block and fees which will be limited in number by blocksize

So if you get
[1] a "HACK"
[2] BTC price drops a lot
[3] Block reward is very low

then you have removed large barrier's to an actors ability to bribe miners to re-org and thus destroy credibility of the BTC network.


Does this not force you to have larger blocks to get enough fees to defend this case?

So  we drop to 6.25 in 2020   

We drop to 3.125 in 2024

We drop to 1.5625 in 2029   

Your example  of a hack killing the price in the year 2029 Is interesting.

But we have a lot of reasons for the tech to stick around.  Mostly in the form of mining hardware and renewable energy.

I Have developed a few solar arrays with buysolar and I am building a larger one as I type.
I know for a fact I am not the only one building these arrays.  They have 20 to 30 year life spans.  Once paid of (4-10years)

they are under 1 penny a Kwatt to maintain.

your idea would be really good for me as a difficulty + btc price crash would make my solar arrays all the more valuable for mining.

The two arrays we paid off should still be running in 2046-2050  so in the long run I would stand to make a lot of money if you are correct.

MY point is others with big pockets will see you idea and hedge with solar builds hoping to mine with 1 cent power on the back end of the 30 year life span of the array.  A setup that you explain happening would be good for all of us that build arrays now.

Fo me price sink to not support diff is money in the bank. So I would think guys that see this will have bigger solar arrays than me.

I see BTC as the super highway and alt coins as taxis and trucks needed to move transactions.
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May 09, 2019, 09:38:39 PM
 #12

I think core it politically wed to 1mb, because if the increase blksize it admits defeat to BCH and BSV

Blocksize has already been increased to 4000000WU with 1 byte non-segwit data = 4WU and 1 byte segwit-data = 1WU. Most of blocks are superior to 1mb in size nowadays : https://blockstream.info/, https://www.blockchain.com/charts/avg-block-size, https://btc.chaintools.io/ .

your missing the point thats a one of collateral effect of segwit

it is not g(x) = s curve function that addresses block size over time.

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May 09, 2019, 09:53:56 PM
Merited by ETFbitcoin (1)
 #13

[1] Does not matter to a malicous attacker, eg short btc 50x on bitmex or whatever, or govt or corp or whatever
Then Bitcoin is flawed now, already. And BCH and BSV too Wink
Because the "50x shorting attack" is already possible. With Bitcoin and all altcoins, including Proof-of-stake ones. Maybe centralized ones like Ripple could save themselves but I don't consider them really competitors for BTC, more for PayPal Tongue

As I wrote, the bribing attack would have costs of a similar magnitude than a regular 50+1% attack. You seem to have omitted that part of my post, and also bones261's stance that transaction fees could be even higher with smaller blocks because the "confirmation panic" (*F*CKSOMANYTRANSACTIONSLETSPAY1000SATOSHIPERBYTEH!!!*), which drives fees to da moon in highly congested times, would arrive much later.

Big blocks would not change anything. If any, they would magnify the problem, because lesser mining actors (pools and solo mining farms) would exist and thus the briber would have to deal with less parties.

Quote
[2] Does not change anything as the incentive system just means [1] again happens.
So the hacker has unlimited funds to finance 2x 51%/re-org attacks and indemnify the miners for their hardware that would be trash in this case? Then he must steal the coins to Satoshi, at least Wink

Quote
There is not reason not 2 2x blocksize now.

I think core it politically wed to 1mb, because if the increase blksize it admits defeat to BCH and BSV
We already have a 4 MB maximum. I agree that doubling it is possible, but the problem is ... as you write, politics. Do you want another Segwit2x war? I could live without it Wink

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May 10, 2019, 12:48:57 AM
Last edit: May 10, 2019, 01:21:10 AM by jubalix
 #14

[1] Does not matter to a malicous attacker, eg short btc 50x on bitmex or whatever, or govt or corp or whatever
Then Bitcoin is flawed now, already. And BCH and BSV too Wink
Because the "50x shorting attack" is already possible. With Bitcoin and all altcoins, including Proof-of-stake ones. Maybe centralized ones like Ripple could save themselves but I don't consider them really competitors for BTC, more for PayPal Tongue

As I wrote, the bribing attack would have costs of a similar magnitude than a regular 50+1% attack. You seem to have omitted that part of my post, and also bones261's stance that transaction fees could be even higher with smaller blocks because the "confirmation panic" (*F*CKSOMANYTRANSACTIONSLETSPAY1000SATOSHIPERBYTEH!!!*), which drives fees to da moon in highly congested times, would arrive much later.

Big blocks would not change anything. If any, they would magnify the problem, because lesser mining actors (pools and solo mining farms) would exist and thus the briber would have to deal with less parties.


No. They are not flawed.

The argument  I make is when the block subsidy is very low versus the value of the fees and the value of BTC is high, the block size will have an impact on how secure the chain is.

At some point these function come close to a "minima" were there are not enough fees to secure the miners as the subsidy will be too low to protect the value of the coins in the block.

1mb or 4 via segwit seems to low.

BCH and BSV clearly allow for more onchain traffic thus fees. So for this vector it is less of an attack surface. However they may face centralisation vectors due to too large blocks.

I main maintain the must at a minimum be a g(x) = s-curve where the g(x) = a function of supply, as supply from g(x) increases. This provides a basal offset an pathway to blocksize

perhaps g(x) should also have some type of usage like bitpays bip for adaptive size blocks https://medium.com/@spair/an-adaptive-block-size-for-bitcoin-947fbc620c9b as well.

I fear that Core is politically wedded to 1MB and I have no issue with the 2X thing happening again.

GMAXWELL had no answer to this when I put it to him a few years ago and his silence has been deafening since.

For reference Satoshi had 32 MB blocks and he calculated hardware would keep up with bigger blocks.

Bitcoin needs both larger blocks and segwit. Both main camps have failed to accept this and the whole projects and society suffers.

The both need to swallow their pride independently.

Core has no technical or valid political argument against a s curve increase of small%




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May 10, 2019, 01:25:59 AM
 #15



Quote
[2] Does not change anything as the incentive system just means [1] again happens.
So the hacker has unlimited funds to finance 2x 51%/re-org attacks and indemnify the miners for their hardware that would be trash in this case? Then he must steal the coins to Satoshi, at least Wink


[A.] No. they do not need unlimited funds. Just that the value of the funds in the block or number of blocks is greater than the block reward and fees.

[B.]. No. Just that they can benefit more from the disruption eg by short, where fees and blockreward are too little versus benefit from disruption. Noteing they only have to achieve disruption once to discount all future value of the blockchain/BTC.

[C.] Yes, there is unlimited money, it keeps getting printed and will always be funneled to this type of project.

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May 10, 2019, 07:59:04 AM
 #16

The argument  I make is when the block subsidy is very low versus the value of the fees and the value of BTC is high, the block size will have an impact on how secure the chain is.

That's just an assumption you make.
There is nothing to prove that point of view.



1mb or 4 via segwit seems to low.
[...]
Bitcoin needs both larger blocks and segwit. Both main camps have failed to accept this and the whole projects and society suffers.

No it doesn't.

Segwit is necessary for further scaling, yes. But bigger blocks are not.

There are way better scaling options available than just increasing the blocksize, therefore it is not necessary (not saying slightly increased blocksize would hurt BTC).



For reference Satoshi had 32 MB blocks and he calculated hardware would keep up with bigger blocks.

No, he didn't.

He released bitcoin without any block size limit.
Due to the network design, the messages allowed to be send were limited to 32 mb. Therefore creating some kind of a block size limit.

In september 2010 he set a blocksize limit of 1MB to prevent spam / useless transactions filling up the blocks unnecessarily.

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May 10, 2019, 08:52:13 AM
 #17

The argument  I make is when the block subsidy is very low versus the value of the fees and the value of BTC is high, the block size will have an impact on how secure the chain is.

That's just an assumption you make.
There is nothing to prove that point of view.


No, there must be limits.

why not have a 1kb block why not have a 10 terabyte block. There must be a maximum utility in there some where


Quote
1mb or 4 via segwit seems to low.
[...]
Bitcoin needs both larger blocks and segwit. Both main camps have failed to accept this and the whole projects and society suffers.

No it doesn't.

Segwit is necessary for further scaling, yes. But bigger blocks are not.

There are way better scaling options available than just increasing the blocksize, therefore it is not necessary (not saying slightly increased blocksize would hurt BTC).


You confusing scaling, by  logical and nomclature error of making and calling all scaling the same.

Sure you can scale off chain but that does not mean you can have a different type of scaling onchain.

Why do you try and hold out they are of the same species when clearly they are not in anyway and serve different use cases.




Quote
For reference Satoshi had 32 MB blocks and he calculated hardware would keep up with bigger blocks.

No, he didn't.

He released bitcoin without any block size limit.
Due to the network design, the messages allowed to be send were limited to 32 mb. Therefore creating some kind of a block size limit.

In september 2010 he set a blocksize limit of 1MB to prevent spam / useless transactions filling up the blocks unnecessarily.



Ok my error in so far as the whole history, the 1MB a temp measure if I recall.

also I hold there can be no spam on a blockchain as the "spammer" as long as they can pay is as valid as anyone else. Your just calling them a spammer, but a larger blocksize make it much more expensive to "spam"

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May 10, 2019, 08:59:27 AM
Last edit: May 10, 2019, 02:51:40 PM by darosior
Merited by ETFbitcoin (1)
 #18

Ok my error in so far as the whole history, the 1MB a temp measure if I recall.

also I hold there can be no spam on a blockchain as the "spammer" as long as they can pay is as valid as anyone else. Your just calling them a spammer, but a larger blocksize make it much more expensive to "spam"
This is not to prevent block chain spam, it was to prevent a DOS vector which would allow an attacker to create big blocks and flood the network.

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May 10, 2019, 09:41:40 AM
 #19

The argument  I make is when the block subsidy is very low versus the value of the fees and the value of BTC is high, the block size will have an impact on how secure the chain is.
That's just an assumption you make.
There is nothing to prove that point of view.

No, there must be limits.

why not have a 1kb block why not have a 10 terabyte block. There must be a maximum utility in there some where

How is this related to your statement that a higher blocksize increases the security (which i replied to) ?



Sure you can scale off chain but that does not mean you can have a different type of scaling onchain.

Never said that.
I said you don't need to increase the blocksize.

Never said that you shouldn't under any circumstances. Neither did i said that purely off-chain is the best solution.
On-chain scaling solutions are good, as long as it's not about purely increasing the blocksize.



[...] but a larger blocksize make it much more expensive to "spam"

Not really.

Imagine a blocksize of 1000 MB.
Imagine the blocks are filled with 1MB regular transactions (without spam).

Now an attacker can fill the remaining 999MB of the block with 1 sat/B transactions.

He couldn't create 999MB traffic with 1sat/B transactions with a block size limit of 1MB. This would require him to have 999 blocks completely filled with his 1sat/B transactions.
A much higher fee (actually highest paying fee relative to all other transactions) would be necessary to generate 999MB traffic in this case.

It is cheaper to fill large blocks, than to fill small blocks.

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May 10, 2019, 10:26:43 AM
Merited by bones261 (2), vapourminer (1), ETFbitcoin (1)
 #20

No. They are not flawed.
Exactly, the incentive model works well. And it will continue to do so even if...
Quote
the block subsidy is very low versus the value of the fees and the value of BTC is high
.

You are right that there must be a certain "average transaction fee level" per block (which you mention as g(x) ) to maintain the security of the chain when block rewards continue to descend. But your conclusion...
Quote
the block size will have an impact on how secure the chain is.
is flawed. The amount of transaction fees and maximum block size are not directly related, and their relation is pretty complex.

In late 2017, for example, Bitcoin had less block capacity than now because the percentage of Segwit transactions (which have less weight) was lower, but transaction fees were much higher than now, because blocks were fuller - that means, people were panicking to get their transactions included, and thus offered to pay high fees.

If the transaction block limit is too high, then - as was already written by others in this thread - the average fees per transaction stay low. In BCH, in theory I can send transactions for the absolute minimum because blocks are almost never full.

Now imagine the block size limit stays low at 4MB, and most transactions are carried out on sidechains, the Lightning Network, and other off-chain mechanisms (even centralized ones, like via Coinbase). The transaction fees on these "second layers" would be low, but their "wellbeing" depends on transactions on the main chain (be it via atomic swaps from and to sidechains, or channel opening/settlement transactions on LN). So in a world with high Bitcoin adoption the second layers would provide enough demand to ensure the transaction fees on the base layer stay high enough.

I agree however that at some point in the future block size should be increased, but this is not a priority issue now. Schnorr signatures and friends are much more promising in the near future. It would become a priority if the working of second layers cannot be ensured anymore with the current block size, e.g. if the demand for LN channel opening/settlement transactions is as high (or almost as high) as the block capacity.

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