Bitcoin 20MB Fork

[redsn0w]

So at the end what are the real problems with the hard-fork ?

- Bandwidth
- Download/upload (of all the users)
- The reward fee for the  Pools (miners).
..
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[inBitweTrust]

^ Gavin is actually proposing increasing the limit to ~16.8 MB, and then having it increase by 1.4X every year, for 20 years.

He picked this number after running experiments to see how a full node would function with 20 MB blocks, and seeing that it could easily handle it.

I think increasing the limit to 20MB is ok .... but will refuse to support a hardfork that includes an algo that automatically increases the limit every 1.4 years... It is one thing to test up to 200MB and another thing to assume that is the future we want when we could easily have other solutions along the way.

[hdbuck]

Good paper..

The Economics of Bitcoin Transaction Fees: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2400519

We study the economics of Bitcoin transaction fees in a simple static partial
equilibrium model with the specificity that the system security is directly linked to
the total computational power of miners. We show that any situation with a fixed
fee is equivalent to another situation with a limited block size. In both cases, we
give the optimal value of the transaction fee or of the block size. We also show that
making the block size a non binding constraint and, in the same time, letting the fee
be fixed as the outcome of a decentralized competitive market cannot guarantee the
very existence of Bitcoin in the long-term...

[cbeast]

Good paper..

The Economics of Bitcoin Transaction Fees: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2400519

We study the economics of Bitcoin transaction fees in a simple static partial
equilibrium model with the specificity that the system security is directly linked to
the total computational power of miners. We show that any situation with a fixed
fee is equivalent to another situation with a limited block size. In both cases, we
give the optimal value of the transaction fee or of the block size. We also show that
making the block size a non binding constraint and, in the same time, letting the fee
be fixed as the outcome of a decentralized competitive market cannot guarantee the
very existence of Bitcoin in the long-term...

A myopic dissertation of double-entry accounting era thinking. He's criticizing a startup company, not Bitcoin. Bitcoin is about breaking paradigms in economics. At least he admits using simple statistics, but his conclusion has been debunked. Then I noticed this paper was written a year ago when the FUD machine was on overdrive.

[hdbuck]

Good paper..

The Economics of Bitcoin Transaction Fees: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2400519

We study the economics of Bitcoin transaction fees in a simple static partial
equilibrium model with the specificity that the system security is directly linked to
the total computational power of miners. We show that any situation with a fixed
fee is equivalent to another situation with a limited block size. In both cases, we
give the optimal value of the transaction fee or of the block size. We also show that
making the block size a non binding constraint and, in the same time, letting the fee
be fixed as the outcome of a decentralized competitive market cannot guarantee the
very existence of Bitcoin in the long-term...

A myopic dissertation of double-entry accounting era thinking. He's criticizing a startup company, not Bitcoin. Bitcoin is about breaking paradigms in economics. At least he admits using simple statistics, but his conclusion has been debunked. Then I noticed this paper was written a year ago when the FUD machine was on overdrive.

hmmokee...

[justusranvier]

Good paper..

The Economics of Bitcoin Transaction Fees: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2400519

We study the economics of Bitcoin transaction fees in a simple static partial
equilibrium model with the specificity that the system security is directly linked to
the total computational power of miners. We show that any situation with a fixed
fee is equivalent to another situation with a limited block size. In both cases, we
give the optimal value of the transaction fee or of the block size. We also show that
making the block size a non binding constraint and, in the same time, letting the fee
be fixed as the outcome of a decentralized competitive market cannot guarantee the
very existence of Bitcoin in the long-term...

Which part of the paper validates whether or not the model they chose to examine is an accurate of the present or future operation of the Bitcoin network?

[davout]

Which part of the paper validates whether or not the model they chose to examine is an accurate of the present or future operation of the Bitcoin network?

Part 2. Comments welcome.

[cbeast]

Good paper..

The Economics of Bitcoin Transaction Fees: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2400519

We study the economics of Bitcoin transaction fees in a simple static partial
equilibrium model with the specificity that the system security is directly linked to
the total computational power of miners. We show that any situation with a fixed
fee is equivalent to another situation with a limited block size. In both cases, we
give the optimal value of the transaction fee or of the block size. We also show that
making the block size a non binding constraint and, in the same time, letting the fee
be fixed as the outcome of a decentralized competitive market cannot guarantee the
very existence of Bitcoin in the long-term...

A myopic dissertation of double-entry accounting era thinking. He's criticizing a startup company, not Bitcoin. Bitcoin is about breaking paradigms in economics. At least he admits using simple statistics, but his conclusion has been debunked. Then I noticed this paper was written a year ago when the FUD machine was on overdrive.

hmmokee...

Maybe I am a little rough as it appears to be an undergraduate paper. I just get tired of seeing limited thinking like the "scarce resources of blocks" and ignoring the fact that this is a developing technology. Perhaps I wouldn't be as offended if the paper was titled The Economics of Litecoin.

[hdbuck]

Good paper..

The Economics of Bitcoin Transaction Fees: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2400519

We study the economics of Bitcoin transaction fees in a simple static partial
equilibrium model with the specificity that the system security is directly linked to
the total computational power of miners. We show that any situation with a fixed
fee is equivalent to another situation with a limited block size. In both cases, we
give the optimal value of the transaction fee or of the block size. We also show that
making the block size a non binding constraint and, in the same time, letting the fee
be fixed as the outcome of a decentralized competitive market cannot guarantee the
very existence of Bitcoin in the long-term...

A myopic dissertation of double-entry accounting era thinking. He's criticizing a startup company, not Bitcoin. Bitcoin is about breaking paradigms in economics. At least he admits using simple statistics, but his conclusion has been debunked. Then I noticed this paper was written a year ago when the FUD machine was on overdrive.

hmmokee...

Maybe I am a little rough as it appears to be an undergraduate paper. I just get tired of seeing limited thinking like the "scarce resources of blocks" and ignoring the fact that this is a developing technology. Perhaps I wouldn't be as offended if the paper was titled The Economics of Litecoin.

hehe no problem i get it that all the fuss around txn fees and block size are stirring the community.

however, since you brought up litecoin, there is another paper from the same author that i also found quite interesting..

It Will Cost You Nothing to 'Kill' a Proof-of-Stake Crypto-Currency: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2393940

[justusranvier]

Part 2. Comments welcome.

So what you're saying is that the burden of proof is on the people citing that paper to prove its applicability to Bitcoin, since the authors didn't do it for you.

[NewLiberty]

Good paper..

The Economics of Bitcoin Transaction Fees: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2400519

We study the economics of Bitcoin transaction fees in a simple static partial
equilibrium model with the specificity that the system security is directly linked to
the total computational power of miners. We show that any situation with a fixed
fee is equivalent to another situation with a limited block size. In both cases, we
give the optimal value of the transaction fee or of the block size. We also show that
making the block size a non binding constraint and, in the same time, letting the fee
be fixed as the outcome of a decentralized competitive market cannot guarantee the
very existence of Bitcoin in the long-term...

A myopic dissertation of double-entry accounting era thinking. He's criticizing a startup company, not Bitcoin. Bitcoin is about breaking paradigms in economics. At least he admits using simple statistics, but his conclusion has been debunked. Then I noticed this paper was written a year ago when the FUD machine was on overdrive.

hmmokee...

Block size limits are not so much about mining economics.  More about controlling threats to Bitcoin and keeping it both secure and useful.

There is room in the blocks today, and some transactions with lower than the recommended fees get queued anyway, so there is already a market for block space without hitting the max size.  Free transactions still do get processed eventually.  This is fairly optimal (and this current reality is in contrast to assumptions made in the paper, the paper is not really so great).

If you are concerned about miner economics, consider (as mentioned in the paper you cite by pointing to the [urlhttp://www.cs.cornell.edu/~ie53/publications/btcProcArXiv.pdf]selfish mining paper[/url]):
The fees are a tiny minority of the miner rewards today.  Part of increasing that percentage is having more transactions per block.

...However, the notion of selfish mining is created to an extent by very large block sizes.  Larger Blocks take a longer time to propagate and so have a similar effect (but lesser and non-insidious) to block withholding.

So at the end what are the real problems with the hard-fork ?

- Bandwidth
- Download/upload (of all the users)
- The reward fee for the  Pools (miners).
..
...

Add storage, search, maintenance, then multiply by the number of full nodes.

I don't thing there is much of a reward fee problem here though.

Which part of the paper validates whether or not the model they chose to examine is an accurate of the present or future operation of the Bitcoin network?

Part 2. Comments welcome.

It is not accurate to the present or future operation of the Bitcoin network (as I mention above also), it is a model only, and not at all a complete one.
Like doing physics but discounting friction.  It isn't really close enough to be useful.

[NewLiberty]

Part 2. Comments welcome.

So what you're saying is that the burden of proof is on the people citing that paper to prove its applicability to Bitcoin, since the authors didn't do it for you.

It took only a few minutes to see some pretty large holes in the idealized model used by the paper.
It is theoretical only, and has no practical application.   It assumes a reality that is in contrast to how things are actually in operation today, so...

[DeathAndTaxes]

Guys i am trying to understand the whole thing, but please ELI5 how will be my coins, stored in paper wallets affected??? I will have to sell them and buy new coins on the new fork or i will be able to use my coins on both blockchains....? I don't get it   If this is the case, that we will have to sell our coins and buy new ones, i don't want that....

Nope.  You don't have to do anything.  If there is a fork you would need to upgrade your client if/when you decide to spend coins.  That is about it.  Seeing how Gavin and the other developers moved forward with P2SH it won't happen until there is a super majority of support.

[DeathAndTaxes]

Look, I'm ready to vote with my feet. 

Where can I download the source (or patch, or signed executable) for a bitcoind / bitcoin-qt / bitcoin-cli that has the 20MB block limit + annual growth?  I will start running it, immediately.

After all, it's not going to reject any blocks that current versions accept.  When a larger block comes along, I don't want to be one of the nodes that rejects it.

Hard forks are not trivial.  This is going to be a six month process.  The goal would be that when the fork occurs a super majority of users, merchants, service providers, exchanges, and miners are already proactively ready.  Despite the gnashing of teeth, doomsday claims, and threats of a bitcoin war when the fork happens it will be a wimper.  We saw the same thing with P2SH.  The reason we are talking about it now is because it is a long process and talking about it after the transactions are backing up due to insufficient capacity would put everyone behind the eight ball.

[RoadStress]

Guys i am trying to understand the whole thing, but please ELI5 how will be my coins, stored in paper wallets affected??? I will have to sell them and buy new coins on the new fork or i will be able to use my coins on both blockchains....? I don't get it   If this is the case, that we will have to sell our coins and buy new ones, i don't want that....

Nope.  You don't have to do anything.  If there is a fork you would need to upgrade your client if/when you decide to spend coins.  That is about it.  Seeing how Gavin and the other developers moved forward with P2SH it won't happen until there is a super majority of support.

So coins will be usable in both forks if you use the proper client right?

[davout]

So coins will be usable in both forks if you use the proper client right?

Yup. Meaning their fungibility will be destroyed at the time of the fork.
Which means in turn that there will be a market.
And if there's a market, it's pretty obvious that one will be dumped and one will be hoarded, and that it'll seal the fate of one of the two diverging chains.

In other words, it won't be a "vote", a "discussion", or a "negotiation", it'll pretty much be a rape.

[CoinCidental]

Guys i am trying to understand the whole thing, but please ELI5 how will be my coins, stored in paper wallets affected??? I will have to sell them and buy new coins on the new fork or i will be able to use my coins on both blockchains....? I don't get it   If this is the case, that we will have to sell our coins and buy new ones, i don't want that....

Nope.  You don't have to do anything.  If there is a fork you would need to upgrade your client if/when you decide to spend coins.  That is about it.  Seeing how Gavin and the other developers moved forward with P2SH it won't happen until there is a super majority of support.

So coins will be usable in both forks if you use the proper client right?

do you mean like double spend the coins on both chains at the same time or just freedom to choose either chain ?

[inBitweTrust]

In other words, it won't be a "vote", a "discussion", or a "negotiation", it'll pretty much be a rape.

You have a choice to avoid being raped by staying true to the original plan. Stay away from the likes of the Cosby and MP, and join the fork that will survive and grow.

We need to stay consistent with the transactional growth that Satoshi envisioned and that we were all promised.



Rather than focusing so much on any futile efforts to prevent Bitcoins growth the detractors should be focused upon other solutions to grow the 2-7tps limit before the hardfork goes through . I would be ecstatic to have other options that can raise the tps responsibly and realistically without having to increase the block limit to 20MB.

[Buffer Overflow]

Guys i am trying to understand the whole thing, but please ELI5 how will be my coins, stored in paper wallets affected??? I will have to sell them and buy new coins on the new fork or i will be able to use my coins on both blockchains....? I don't get it   If this is the case, that we will have to sell our coins and buy new ones, i don't want that....

Nope.  You don't have to do anything.  If there is a fork you would need to upgrade your client if/when you decide to spend coins.  That is about it.  Seeing how Gavin and the other developers moved forward with P2SH it won't happen until there is a super majority of support.

So coins will be usable in both forks if you use the proper client right?

do you mean like double spend the coins on both chains at the same time or just freedom to choose either chain ?

If you had say 100 coins before the fork, afterwards you will have 100 in the 1MB chain and 100 coins in the 20MB chain.
They will be separate chains but not compatible. For example, I cannot send bitcoin to the litecoin chain they are incompatible.

[CoinCidental]

Guys i am trying to understand the whole thing, but please ELI5 how will be my coins, stored in paper wallets affected??? I will have to sell them and buy new coins on the new fork or i will be able to use my coins on both blockchains....? I don't get it   If this is the case, that we will have to sell our coins and buy new ones, i don't want that....

Nope.  You don't have to do anything.  If there is a fork you would need to upgrade your client if/when you decide to spend coins.  That is about it.  Seeing how Gavin and the other developers moved forward with P2SH it won't happen until there is a super majority of support.

So coins will be usable in both forks if you use the proper client right?

do you mean like double spend the coins on both chains at the same time or just freedom to choose either chain ?

If you had say 100 coins before the fork, afterwards you will have 100 in the 1MB chain and 100 coins in the 20MB chain.
They will be separate chains but not compatible. For example, I cannot send bitcoin to the litecoin chain they are incompatible.

i think the 1MB chain is doomed
il be going with the foundation bitcoin core's decision as will the majority of big  exchanges etc

to stick with a minority who want to mine the MPcoin would be crazy imo