About block size limit and transactions fees

[Wind_FURY]

A block size increase “based on demand”, and leaving it to the miners to decide how large the blocks should be “based on demand” is a very dangerous proposition, topcoin360. It will open an attack vector, that would possibly disrupt the network.

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[GGUL]

Could you tell us how would you determine what the block size limit should be in the future?

Estimate the time it takes for blocks to be propagated through the majority of the network. Determine the block size that still takes a reasonable amount of time to propagate through the network and use that as the max block size.

Currently, the 4vMB blocks have a median propagation time of 6.5s (or less since the study was done a long time ago). If we can keep the expected stale rates to be <5%, then I consider it an acceptable compromise. Expected stale rate is a function of the time it takes for the block to propagate and the block intervals.

1. It is worth noting that the speed of distribution of blocks in general on the network does not play a special role for mining. The main thing is what is the speed of distribution of blocks within the subnet that covers miners. If the speed inside the subnet was at the level of 1 second, we would have ~1.6% of orphan blocks. But there are much fewer orphan blocks at the moment. Somewhere on the forum, a figure of 0.0024% was given (I can't vouch for the accuracy). This means that the speed is now much less than 1 sec.

2. When using a technology such as spv mining, the block size ceases to affect the number of orphan blocks. Miners start mining the next block almost immediately after the block appears. However, this increases the number of empty blocks. But I think this is quite a reasonable compromise: reducing the number of orphan blocks at the expense of some increase in empty blocks. Moreover, an empty block, which sometimes appears a few seconds after a non-empty block, does not cause any inconvenience to users.

From all this, we can conclude that, for example, 10-20 MB. blocks do not pose any threat to the security of the network in terms of orphan blocks.

A block size increase “based on demand”, and leaving it to the miners to decide how large the blocks should be “based on demand” is a very dangerous proposition, topcoin360. It will open an attack vector, that would possibly disrupt the network.

As far as I understand, you do not want to allow miners to increase the block, because they will have the opportunity to hack the system. Very strange reasoning. After all, miners ALREADY have a 100% chance to hack the system. If, of course, they have such a collective desire. For example, they can start mining empty blocks. Or make a 51% attack. That's all, the system is broken.

It looks like this: a person has a full warehouse of weapons. And you : we can't give him a loaded gun. He will have the opportunity to kill someone.

The security of the bitcoin system is 99.99% dependent on the miners. And if you give them the opportunity to change the block size, nothing will change. Similarly, the security will be 99.99% dependent on the miners.

[ranochigo]

1. It is worth noting that the speed of distribution of blocks in general on the network does not play a special role for mining. The main thing is what is the speed of distribution of blocks within the subnet that covers miners. If the speed inside the subnet was at the level of 1 second, we would have ~1.6% of orphan blocks. But there are much fewer orphan blocks at the moment. Somewhere on the forum, a figure of 0.0024% was given (I can't vouch for the accuracy). This means that the speed is now much less than 1 sec.

Correct. Keep in mind that doing so would make the current mining scene more centralized, whereby miners that are not interconnected with the majority of the miners are more likely to experience more orphans, due to the lack of a direct connection.

2. When using a technology such as spv mining, the block size ceases to affect the number of orphan blocks. Miners start mining the next block almost immediately after the block appears. However, this increases the number of empty blocks. But I think this is quite a reasonable compromise: reducing the number of orphan blocks at the expense of some increase in empty blocks. Moreover, an empty block, which sometimes appears a few seconds after a non-empty block, does not cause any inconvenience to users.

From all this, we can conclude that, for example, 10-20 MB. blocks do not pose any threat to the security of the network in terms of orphan blocks.

I would prefer miners to validate the blocks first. SPV mining is not a behavior that I think we should encourage, we've had a mishap with SPV mining in the past so probably not such a good idea given that current validation speeds are sufficiently fast.

I don't think those sizes are particularly unrealistic to achieve in the future. If you don't need the majority of the network to be able to run their own nodes and that mining to be centralized with a few entities, then it should probably be fine.

[GGUL]

1. It is worth noting that the speed of distribution of blocks in general on the network does not play a special role for mining. The main thing is what is the speed of distribution of blocks within the subnet that covers miners. If the speed inside the subnet was at the level of 1 second, we would have ~1.6% of orphan blocks. But there are much fewer orphan blocks at the moment. Somewhere on the forum, a figure of 0.0024% was given (I can't vouch for the accuracy). This means that the speed is now much less than 1 sec.

Correct. Keep in mind that doing so would make the current mining scene more centralized, whereby miners that are not interconnected with the majority of the miners are more likely to experience more orphans, due to the lack of a direct connection.

You want to say that if all miners establish the highest possible exchange rate among themselves, this makes the system "more centralized". Judging by the number of orphan blocks, the miners have achieved this goal. That is, at the moment, the miners are as "centralized" as possible in terms of the exchange between them. It is simply impossible to make it "more centralized" already.

(p/s/ reasoning in terms of "increasing / decreasing centralization/decentralization" is meaningless until you determine what these indicators are:" level of decentralization / level of centralization". And how these levels are measured.)

Some miner will not want to, cannot speed up the exchange with other miners as much as possible and will lose his income because of this. And another miner can. So these are the problems of the miner. We do not solve the problems of miners in terms of the price of electricity, equipment, taxes. Why should we solve the problems of the miner in terms of its exchange rate over the network?

I would prefer miners to validate the blocks first. SPV mining is not a behavior that I think we should encourage, we've had a mishap with SPV mining in the past so probably not such a good idea given that current validation speeds are sufficiently fast.

As far as I know, there has been one failure with spv mining over the past 5 years. And besides the loss of a part of the miners ' income, there were no other losses. Yes, spv mining has risks for the miner. And the miner himself decides whether to use it or not. And if you claim that it is impossible to increase the block in order not to encourage miners to use spv mining, then this is one of the most ridiculous arguments against increasing the block.

I don't think those sizes are particularly unrealistic to achieve in the future. If you don't need the majority of the network to be able to run their own nodes and that mining to be centralized with a few entities, then it should probably be fine.

IIt is interesting that now, when it is almost free to save a full node, less than 1% of users save it. Why we set such a goal: so that most users can have a full node. If most people don't need it. To achieve this goal, we almost stopped the development and expansion of the bitcoin system 4 years ago. As for me, this is too expensive and pointless a sacrifice.

Maybe it makes sense to look at reality and change our goals. For example, so that the number of nodes is not less than a certain number, which is enough to ensure the security of the system.

[ranochigo]

You want to say that if all miners establish the highest possible exchange rate among themselves, this makes the system more centralized. Judging by the number of orphan blocks, the miners have achieved this goal. That is, at the moment, the miners are as centralized as possible in terms of the exchange between them. It is simply impossible to make it more centralized already.

Hmm. I recall certain pools don't have direct connections to each other and were resorting to running zombies on each other in the past. I find the current stale rates fairly reasonable and mining pools don't necessarily have to resort to those tactics to improve their propagation. If we were to reach the state whereby blocks takes 50 seconds to propagate, then is it possible for the major mining pools to strategically exclude others from their exclusive "subnet"?

Yes, spv mining has risks for the miner. And the miner himself decides whether to use it or not. And if you claim that it is impossible to increase the block in order not to encourage miners to use spv mining, then this is one of the most ridiculous arguments against increasing the block.

I don't think anyone has ever claimed that. On the contrary, we have proven that full validation is sufficiently fast that the benefits of SPV mining is slim to none. The problem of SPV mining is that it is two fold; the incident caused a longer than usual block re-org and the damage could've definitely extended beyond the users.

[GGUL]

You want to say that if all miners establish the highest possible exchange rate among themselves, this makes the system more centralized. Judging by the number of orphan blocks, the miners have achieved this goal. That is, at the moment, the miners are as centralized as possible in terms of the exchange between them. It is simply impossible to make it more centralized already.

Hmm. I recall certain pools don't have direct connections to each other and were resorting to running zombies on each other in the past. I find the current stale rates fairly reasonable and mining pools don't necessarily have to resort to those tactics to improve their propagation. If we were to reach the state whereby blocks takes 50 seconds to propagate, then is it possible for the major mining pools to strategically exclude others from their exclusive "subnet"?

Miners can do this right now. The main mining pools can strategically exclude others from their exclusive "subnet" by simply broadcasting a new block only among themselves, and transmitting it to the general network with some delay. If it was profitable. Judging by the fact that this is not being done, the miners do not have any benefit from this. Or they do not want to do this for the sake of a minimal and risky increase in income. Any activity of this kind is a loss of Bitcoin's reputation, which will eventually lead to much greater losses.

[Wind_FURY]

A block size increase “based on demand”, and leaving it to the miners to decide how large the blocks should be “based on demand” is a very dangerous proposition, topcoin360. It will open an attack vector, that would possibly disrupt the network.

As far as I understand, you do not want to allow miners to increase the block, because they will have the opportunity to hack the system. Very strange reasoning. After all, miners ALREADY have a 100% chance to hack the system. If, of course, they have such a collective desire. For example, they can start mining empty blocks. Or make a 51% attack. That's all, the system is broken.

It looks like this: a person has a full warehouse of weapons. And you : we can't give him a loaded gun. He will have the opportunity to kill someone.

The security of the bitcoin system is 99.99% dependent on the miners. And if you give them the opportunity to change the block size, nothing will change. Similarly, the security will be 99.99% dependent on the miners.

Hack the system? No, that’s not the reason. I’m talking about incentives. If you give the miners the power to decide how large the blocks should be “based on demand”, then you’re giving them an incentive to fake that demand for them to earn more in fees. Especially when most of the coins are mined out.

[GGUL]

A block size increase “based on demand”, and leaving it to the miners to decide how large the blocks should be “based on demand” is a very dangerous proposition, topcoin360. It will open an attack vector, that would possibly disrupt the network.

As far as I understand, you do not want to allow miners to increase the block, because they will have the opportunity to hack the system. Very strange reasoning. After all, miners ALREADY have a 100% chance to hack the system. If, of course, they have such a collective desire. For example, they can start mining empty blocks. Or make a 51% attack. That's all, the system is broken.

It looks like this: a person has a full warehouse of weapons. And you : we can't give him a loaded gun. He will have the opportunity to kill someone.

The security of the bitcoin system is 99.99% dependent on the miners. And if you give them the opportunity to change the block size, nothing will change. Similarly, the security will be 99.99% dependent on the miners.

Hack the system? No, that’s not the reason. I’m talking about incentives. If you give the miners the power to decide how large the blocks should be “based on demand”, then you’re giving them an incentive to fake that demand for them to earn more in fees. Especially when most of the coins are mined out.

"an attack vector, that would possibly disrupt the network"- isn't that "hacking the system"?  

The miner can increase its income due to the fact that users will pay a large commission for the transaction. This can be achieved by reducing the block. Or by setting a high commission for the right to be included in the block. And the miners ALREADY have such an opportunity. Miners can set any commission they want. To do this, they do not need to "fake demand".

A couple of years ago, a delusional idea was popular that miners fill blocks with their transactions (fake  demand) in order to artificially increase the mempool and thus earn more commissions. Miners ALREADY have such an opportunity - "to fake demand".  

Delusional ideas die very hard.

[topcoin360]

A block size increase “based on demand”, and leaving it to the miners to decide how large the blocks should be “based on demand” is a very dangerous proposition, topcoin360. It will open an attack vector, that would possibly disrupt the network.

If you're worried about a congestion attack with a higher limit then you should also be worried about a DDoS attack with a lower limit. Idk what the exact limit should be, but I know that it should be updated more than once every 10 years.  

I didn't expect this thread to turn into a capitalism vs. communism debate (those who believe in free market and those who believe that everyone should run a full node ). The only thing I can tell you is the customers will always go to whoever can give them what they want.

Since we're talking about the possibility of a new consensus rule and not a vector of attack, I think we should discuss the technical details and see if it works in the first place. I've seen a potential flaw in the model I proposed, although it is very unlikely to happen, in theory the excess supply could exceed the actual limit which means the block size limit in the next epoch would be below 0. We can easily fix that problem by introducing a minimum of 1MB which is the current maximum value (that would be our starting point).

Open for discussion!

[pooya87]

The miners are the ones securing the network and I think most of them can easily afford to buy more storage/bandwith.

This is wrong.
Miners AND nodes are both securing the network. Miners by providing hashrate and securing the network against 51% attacks and nodes by enforcing the consensus rules and keeping Bitcoin decentralized.

In this regard, less people running a full node isn't really a threat...

When speaking of number of nodes, block size, etc. saying things like "less" is ambiguous. The real question is "by how much?".
For example when discussing block size increase it should be clarified whether we are talking about a small increase (eg. 1 to 2 MB) or a bigger increase (eg. 1 to 100 MB), there is a big difference between these two. Same with number of nodes. If you could find historical data of nodes or a chart showing the count you could see that we have had big drops and slow rises in the past. For instance back when block started becoming full and again when there was a spam attack where mempool grow to huge sizes the number of nodes decline. But when the price started rising and bitcoin adoption grew the number of nodes went back up again.

So lets put "less people running a full node" into perspective. If now that we have 50k nodes it dropped to 20k, things will still be fine but if it dropped to 1k with only a dozen listening nodes then the network will be in some trouble that will only get worse with time.

Also the thing about block size is that it doesn't matter how much you increase it, in the end it won't be enough. So the trick is to increase it in a way that it minimize the inevitable damage but not so much that it disrupts everything.

[Wind_FURY]

A block size increase “based on demand”, and leaving it to the miners to decide how large the blocks should be “based on demand” is a very dangerous proposition, topcoin360. It will open an attack vector, that would possibly disrupt the network.

If you're worried about a congestion attack with a higher limit

Why would I be worried about network congestion when the miners can increase the block size “based on demand”. What you should be worried about is the centralizing nature of your proposal, and how a cartel of miners can exploit the system by faking demand. Like what gmaxwell mentioned, Calvin Ayre has been faking demand in BSV. Haha.

then you should also be worried about a DDoS attack with a lower limit. Idk what the exact limit should be, but I know that it should be updated more than once every 10 years.

This might be a stupid question, but does small blocks make Bitcoin more vulnerable to DDOS? I thought one of the reasons there was a 1MB cap on the block size was to help prevent DDOS.

A block size increase “based on demand”, and leaving it to the miners to decide how large the blocks should be “based on demand” is a very dangerous proposition, topcoin360. It will open an attack vector, that would possibly disrupt the network.

As far as I understand, you do not want to allow miners to increase the block, because they will have the opportunity to hack the system. Very strange reasoning. After all, miners ALREADY have a 100% chance to hack the system. If, of course, they have such a collective desire. For example, they can start mining empty blocks. Or make a 51% attack. That's all, the system is broken.

It looks like this: a person has a full warehouse of weapons. And you : we can't give him a loaded gun. He will have the opportunity to kill someone.

The security of the bitcoin system is 99.99% dependent on the miners. And if you give them the opportunity to change the block size, nothing will change. Similarly, the security will be 99.99% dependent on the miners.

Hack the system? No, that’s not the reason. I’m talking about incentives. If you give the miners the power to decide how large the blocks should be “based on demand”, then you’re giving them an incentive to fake that demand for them to earn more in fees. Especially when most of the coins are mined out.

"an attack vector, that would possibly disrupt the network"- isn't that "hacking the system"?  

“Hack” would not be the term I would use.

[BlackHatCoiner]

This might be a stupid question, but does small blocks make Bitcoin more vulnerable to DDOS? I thought one of the reasons there was a 1MB cap on the block size was to help prevent DDOS.

Isn't DDoS made in the mempool only? Essentially, an attacker broadcasts dust transactions to occupy the space and prevent from other transactions to be mined. I suppose that it doesn't matter if the block size is 1MB or 1GB, because the analogy of the median fee and the total fees the attacker has to pay remain the same.

“Hack” would not be the term I would use.

It is surely not a “hack”. Maybe “attacking” suits more properly.

Generally a hacking is when someone explores a system weakness. For example, the person who found the problematic functions from Poly's source code and decided to get advantage of it is a hacker.

[ranochigo]

This might be a stupid question, but does small blocks make Bitcoin more vulnerable to DDOS? I thought one of the reasons there was a 1MB cap on the block size was to help prevent DDOS.

Large block takes a longer time to validate, so an excessively large block can be a resource exhaustion for underpowered nodes which are incapable of validating them fast enough. Either that, or to prevent blocks being excessively large and making storage excessively expensive, at least at that point in time. That isn't really considered DOS, or at least I don't think it is.

Block caps limits the number of transactions that can be included in the blocks every 10 minutes. A DOS would be a scenario where people start to spam "useless" transactions to prevent others from getting their transactions into the blocks, without spending more in fees. It has been done before, during the whole segwit ordeal. Whether an attack like this would be viable at this day and age depends on the motives and how much they are willing to spend.

[topcoin360]

Alright, alright, guys I'll reveal some facts that may shock you..

1.A shortage of supply (block space) forces many people to leave their coins on their exchange which is a lot more dangerous than a few people not being able to run a full (who probably do not own a wallet anway).
2.Running a full node does not give you a vote, you can "listen" to what others have to say but nobody cares about what you have to say (unless you have large holdings but you guys don't seem to like PoS).
3.A faster block propagation with less transactions per block does not allow transactions to be confirmed more quickly.
4.A miner who finds a new block has an advantage on his competitors as he will start mining the next block before them but any miner who finds a new block has that advantage (which makes the orphan block argument pretty worthless).
5.A higher block size limit may increase miners expenses but it may also increase miners income, therefore small mining farms are not kicked out of the game.
6.Network congestion is no bigger problem than many transactions not being picked by a miner/paying too much fees.

So.. I can only ask, what now?

[Wind_FURY]

Alright, alright, guys I'll reveal some facts that may shock you..

1.A shortage of supply (block space) forces many people to leave their coins on their exchange which is a lot more dangerous than a few people not being able to run a full (who probably do not own a wallet anway).

Dangerous for who?

2.Running a full node does not give you a vote, you can "listen" to what others have to say but nobody cares about what you have to say (unless you have large holdings but you guys don't seem to like PoS).

I believe BIP-148/Segwit showed everyone that that’s not true. In fact, it’s the full nodes that give demand to what the miners produce, and not just any block, it should be a specific type of block with rules enforced by the full nodes.

3.A faster block propagation with less transactions per block does not allow transactions to be confirmed more quickly.

It’s about the settlement assurances, not speed. One confirmation in Bitcoin is still more secure than one confirmation of shitcoins.

5.A higher block size limit may increase miners expenses but it may also increase miners income, therefore small mining farms are not kicked out of the game.

It increases the full nodes’ expenses, not the miners. Do miners run full nodes? I believe most of them don’t. Plus aren’t small mining farms kicked out of the game simply because big mining farms increase the network’s total hashing power, increasing costs, pricing out small miners?

6.Network congestion is no bigger problem than many transactions not being picked by a miner/paying too much fees.

Isn’t the fee market good for miners?

[topcoin360]

Just found a simple equation to balance supply and demand that could be easily introduced in btc source code:

next block size limit = previous block size limit + (total fee in the last period / avg fee in the previous period - space used in the last period) / block occupancy rate for the last period

Now I challenge you to find an equation based on "not centralizing bitcoin too much".

[Wind_FURY]

Just found a simple equation to balance supply and demand that could be easily introduced in btc source code:

next block size limit = previous block size limit + (total fee in the last period / avg fee in the previous period - space used in the last period) / block occupancy rate for the last period

Now I challenge you to find an equation based on "not centralizing bitcoin too much".

No, there is no such equation, because any block size increase, increasing transaction thoughput, which also increases the hardware requirements, and bandwidth requirements to run a full node, will always scale the network in.

[BlackHatCoiner]

Now I challenge you to find an equation based on "not centralizing bitcoin too much".

Well, I had tried in the past, but it was a function, not an equation. It made me feel very ambitious. 

[ABCbits]

Just found a simple equation to balance supply and demand that could be easily introduced in btc source code:

next block size limit = previous block size limit + (total fee in the last period / avg fee in the previous period - space used in the last period) / block occupancy rate for the last period

The harder part is testing the equation on various network condition and accepted by the community.

Now I challenge you to find an equation based on "not centralizing bitcoin too much".

See BIP 103. The exact number and equation definitely need more research though.

[PrimeNumber7]

Just found a simple equation to balance supply and demand that could be easily introduced in btc source code:

next block size limit = previous block size limit + (total fee in the last period / avg fee in the previous period - space used in the last period) / block occupancy rate for the last period

Your equation does nothing to address the issue I brought up previously. Miners can and do receive transaction fees in ways that are not attached to the transaction. For example, viaBTC offers a paid transaction accelerator service for people who have attached too low of fees to their transaction. They charge a fortune for this service, so it is not widely used, but if pools have incentives to show transactions having lower fees than is actually the case, you can guarantee more pools would offer this service, and the cost would be very low.