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Author Topic: Permanently keeping the 1MB (anti-spam) restriction is a great idea ...  (Read 103902 times)
jabo38
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February 05, 2015, 06:22:17 PM
 #121

Sometimes I debate D&T on some issues, but not this time.  Great post. 

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justusranvier
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February 05, 2015, 06:31:50 PM
 #122

Conclusion
The blockchain permanently restricted to 1MB is great if you are a major bank looking to co-opt the network for a next generation limited trust settlement network between major banks, financial service providers, and payment processors.   It is a horrible idea if you even want to keep open the possibility that individuals will be able to participate in that network without using a trusted third party as an intermediary.
I agree 100%.

There will probably be a role for settlement networks in the future, but even if they do exist those settlement networks should not be artificially subsidized by a block size limit.
Peter R
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February 05, 2015, 06:36:37 PM
 #123

Fantastic work, DeathAndTaxes!

Two things really stuck out for me after reading your post:

(1) How ridiculously low the 1 MB limit is if we envision any sort of "success case" for bitcoin. 

(2) How the "don't-increase-the-blocksize-limit-because-centralization" argument is misguided.  You clearly showed that not increasing the blocksize limit could lead to greater centralization by pricing out individuals from trustless access to the blockchain.   

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CIYAM
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February 05, 2015, 06:44:55 PM
 #124

(2) How the "don't-increase-the-blocksize-limit-because-centralization" argument is misguided.  You clearly showed that not increasing the blocksize limit could lead to greater centralization by pricing out individuals from trustless access to the blockchain.  

He didn't as he used a "straw-man" argument that people would use centralised authorities when they could just as easily not (again I am not against raising the 1MB limit but using the wrong arguments for that is simply not persuasive).

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grau
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February 05, 2015, 06:47:32 PM
 #125

Because the block limit is not creating a fees market. The block reward is too high and masks the theoretical "bidding" process for block space

You are right there is no fees market yet, but not for the reason you state.
The block limit is not currently creating a market because it is not yet tight and bigger blocks will not be tight for yet more time.

Miners' only freedom is the freedom to exclude transactions. Can it be used to press users to pay higher fees?
Only if either

1) the space is scarce
2) supported by a rational lower limit to fee, no sane miner crosses
3) played in cartel

You want to eliminate 1) hoping that 2) holds so we do not fall through to 3)

Gaving quantified a rational lower limit to transaction fee as 0.0032/KB. A miner that includes a transaction paying less is no longer compensated for his increased orhpan cost. Miners currently accept even less, that tells miner are either dumb or the rational limit is lower. I suspect people deploying hundreds of millions in equipment would not act dumb for a prolonged time period.
justusranvier
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February 05, 2015, 06:51:12 PM
 #126

1) the space is scarce
Misinformation.

Space in a block is always scarce, regardless of whether or not there's a protocol limit.

The only to make space in a block non-scarce is to invent a way of transmitting data that requires zero energy, zero time, and exceeds the shannon limit.

Whether or not space in a block is scare depends on physics, not on software design.
grau
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February 05, 2015, 07:19:10 PM
 #127

1) the space is scarce
Misinformation.

Space in a block is always scarce, regardless of whether or not there's a protocol limit.

The only to make space in a block non-scarce is to invent a way of transmitting data that requires zero energy, zero time, and exceeds the shannon limit.

Whether or not space in a block is scare depends on physics, not on software design.

Not.

What you describe is less than rational limit in 2.
johnyj
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February 05, 2015, 07:19:57 PM
 #128

You must be able to broadcast that huge block to most of the nodes in 10 minutes. I don't see the latest research regarding this area, but there is a paper from 2013


http://www.tik.ee.ethz.ch/file/49318d3f56c1d525aabf7fda78b23fc0/P2P2013_041.pdf

Based on this research, it took 0.25 seconds for each KB transaction to reach 90% of network. In another word, a 1MB block will take 256 seconds to broadcast to majority of nodes and that is 4 minutes

When block size reach 10MB, you will have a broadcast time of 40 minutes, means before your block reach the far end of the network, those nodes have already digged out 3 extra blocks thus your block is always orphaned by them. And the whole network will have disagreement about which segment have the longest chain, thus fork into different chains

Gavin's proposal is to let mining pools and farms connect to high speed nodes on internet backbone. That is reasonable, since the propagation time is only meaningful for miners, your transaction will be picked up by the mining nodes closest to you and if those mining nodes have enough bandwidth, they can keep up with the speed. But anyway, how much bandwidth is really needed to broadcast 10MB message in a couple of minutes between hundreds of high speed nodes need to be tested. And this is the risk that someone worried about the centralization of mining nodes: Only those who have ultra high speed internet connection can act as nodes (I'm afraid that chinese farms will be dropped out since their connection to the outside world is extremely slow, they will just fork to their own chain inside mainland china)

I don't know how you come to those assumptions based on that research.

Quote
the block message may be very large — up to 500kB at the time of writing.

Quote
The median time until a node receives a block is 6.5 seconds whereas the mean is at 12.6 seconds.

Quote
For blocks, whose size is larger than 20kB, each kilobyte in size costs an additional 80ms delay until a majority knows about the block.

The do not mention the average size of blocks they measured. Let's assume all their blocks were 0KB. 12.6 seconds for that. Add 80 ms per addicition KB.... 80ms * 1024 * 20 is about 27.3 minutes. Add the original 12.6 seconds... Roughly 28 minutes for 20MB.

Of course, 28 minutes is still long. That is based on 2013 data. I assume the nodes now will have improved their verification speed and have more bandwidth. New measurements could / should be made to verify that propagation speed will not become an issue.

I just took the numbers on that chart, their paper says 0.08s/KB but the chart shows 0.25s/KB, no big difference

Ideally, you would like to keep the broadcasting time below 1 minute, to make sure the network does not fork into different chains, and to reduce the orphaned blocks. Currently some connection to china is about 20KB/second, means 1MB data will take 1 minute to just reach their network. Of course china have much less nodes than the rest of the world, but they do have large amount of hashing power

For 10MB block, the bandwidth requirement will be 2Mb, which is quite high if you consider the connection over continent. Hopefully before we reach that stage the network bandwidth has been upgraded


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February 05, 2015, 07:23:34 PM
 #129

What you describe is less than rational limit in 2.

First you start out by grossly misusing economic terms.

Then, when this is pointed out, you reply by making assumptions about theological price levels which you can't possibly calculate because they are not calculable.
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February 05, 2015, 07:25:52 PM
 #130

What you describe is less than rational limit in 2.

First you start out by grossly misusing economic terms.

Then, when this is pointed out, you reply by making assumptions about theological price levels which you can't possibly calculate because they are not calculable.

what is misused and what can not be calculated?
grau
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February 05, 2015, 07:36:47 PM
 #131

If we inspect the fees paid to miners per day in US dollars over the lifetime of the network (avg blocksize << max blocksize), we see that total fee revenue, on average, has grown with increases in the daily transaction volume.

The regression is dominated by increase of BTC value not that of fees.
justusranvier
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February 05, 2015, 07:44:10 PM
 #132

what is misused and what can not be calculated?
A non-scarce good is one that does not require allocation because the available supply at a price of zero exceeds the maximum achievable demand at that price.

No good that requires time or energy to deliver can be non-scarce.

Including transactions in a block will always require both time and energy, therefore the space in a block will be scarce.

Because space in a block is scarce, miners will need to allocate the inclusion of transactions into a block, and there exists a price below which they will not do so.

We can't calculate ahead of time what the equilibrium price of a transaction will be in the future, because that depends on the future actions and preferences of millions of other people.
gmaxwell
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February 05, 2015, 07:53:29 PM
 #133

A non-scarce good is one that does not require allocation because the available supply at a price of zero exceeds the maximum achievable demand at that price.
No good that requires time or energy to deliver can be non-scarce.
Including transactions in a block will always require both time and energy, therefore the space in a block will be scarce.
Because space in a block is scarce, miners will need to allocate the inclusion of transactions into a block, and there exists a price below which they will not do so.
We can't calculate ahead of time what the equilibrium price of a transaction will be in the future, because that depends on the future actions and preferences of millions of other people.
This is a bit unhinged.  The _inherent_ costs of transactions is roughly   size_of_data * decenteralization_level (actually there is a quadratic component in a decentralized network too, but lets ignore that; good design can make it small).  In a free market for transaction capacity based purely on the inherent cost optimal competition can drive decentralization down to lower costs. With a completely centralized system the cost of almost any imaginable scale is basically nothing (e.g. a single <$2000 host on a sub-gigabit network connection is able to process a hundred thousand transactions per second).

So effectively one can replace the fee market with a market that favors the most centralization as they have the lowest costs (as thats all network income would pay for).  This may be true, but it's not interesting-- since if a highly centralized system were desirable there are more efficient and secure ways to achieve one.

I believe you're making a false comparison. None of the market participants have a way to express their preference for a decentralized network except by defining Bitcoin to be one though the rules of the system. Absent that someone who doesn't care and just wants to maximize their short term income can turn the decentralization knob all the way down (as we've seen with the enormous amount of centralization in mining pools) and maximize their income-- regardless of what the owners of bitcoins or the people making the transactions prefer. You could just as well argue that miners should be able to freely print more Bitcoins without limit and magically, if the invisible-pink-hand decides it doesn't want bitcoin to inflate, "the market" will somehow prevent it (in a way that doesn't involve just defining it out of the system).

Of course, 28 minutes is still long. That is based on 2013 data.
This data is massively outdated... it's before signature caching and ultra-prune, each were easily an order of magnitude (or two) improvements in the transaction dependent parts of propagation delay. It's also prior to block relay network, not to mention the further optimizations proposed but not written yet.

I don't actually think hosts are faster, actually I'd take a bet that they were slower on average, since performance improvements have made it possible to run nodes on smaller hosts than were viable before (e.g. crazy people with Bitcoind on rpi). But we've had software improvements which massively eclipsed anything you would have gotten from hardware improvements. Repeating that level of software improvement is likely impossible, though there is still some room to improve.

There are risks around massively increasing orphan rates in the short term with larger blocks (though far far lower than what those numbers suggest), indeed... thats one of the unaddressed things in current larger block advocacy, though block relay network (and the possibility of efficient set reconciliation) more or less shows that the issues there are not very fundamental though maybe practically important.

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Peter R
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February 05, 2015, 08:00:10 PM
 #134

If we inspect the fees paid to miners per day in US dollars over the lifetime of the network (avg blocksize << max blocksize), we see that total fee revenue, on average, has grown with increases in the daily transaction volume.

The regression is dominated by increase of BTC value not that of fees.

The plot shows the total daily fees in USD versus the number of transactions per day.  Indeed the correlation between the BTC value and the number of transactions per day is stronger, but that doesn't make the chart I plotted invalid.  In other words, if the network growth in the future is anything like the network growth in the past, the total fees will continue to increase along with the number of transactions per day (and along with the price of a bitcoin). 

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February 05, 2015, 08:04:17 PM
 #135

This is a bit unhinged.
Typical central planner hubris.
So effectively one can replace the fee market with a market that favors the most centralization they have the lowest costs (as thats all network income would pay for).  This may be true, but it's not interesting-- since if a highly centralized system were desirable there are more efficient and secure ways to achieve one.
You're making assumptions about the preferences of current and future Bitcoin users which are not warranted.

If the world wants a system which can conduct transactions at the lowest possible price, then the world will not choose to use Bitcoin, regardless of what you try to shape their behaviour with arbitrary protocol rules.

If, on the other hand, there is any demand for censorship resistance and money with a predictable supply, then that demand will express itself as a willingness to pay some price to obtain it.

If Bitcoin is going to fail because there is not enough demand for what it provides that people are willing to pay what it costs to obtain it, then Bitcoin is going to fail.

If that's what's going to happen, then no amount of tampering with the price discovery process can change that outcome, and indeed will only be counterproductive to any chances at success Bitcoin does have.
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# Free market


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February 05, 2015, 08:08:48 PM
 #136

Here https://bitcointalk.org/index.php?topic=941331.0;topicseen 215 forum users don't think the same :



CIYAM
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February 05, 2015, 08:10:33 PM
 #137

Here https://bitcointalk.org/index.php?topic=941331.0;topicseen 215 forum users don't think the same :

So - they could be all sockpuppet accounts (as this forum supports that).

Any poll on this forum is worth *zero* so posting the result of any such poll has *zero credibility*.

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redsn0w
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# Free market


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February 05, 2015, 08:13:08 PM
 #138

Here https://bitcointalk.org/index.php?topic=941331.0;topicseen 215 forum users don't think the same :

So - they could be all sockpuppet accounts (as this forum supports that).

Any poll on this forum is worth *zero*.


I know, we can never do a valid poll on this forum.
However I agree with the 20 MB limit, I don't think will be a problem for the bitcoiner users.
justusranvier
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February 05, 2015, 08:19:40 PM
 #139

I believe you're making a false comparison. None of the market participants have a way to express their preference for a decentralized network except by defining Bitcoin to be one though the rules of the system. Absent that someone who doesn't care and just wants to maximize their short term income can turn the decentralization knob all the way down (as we've seen with the enormous amount of centralization in mining pools) and maximize their income-- regardless of what the owners of bitcoins or the people making the transactions prefer. You could just as well argue that miners should be able to freely print more Bitcoins without limit and magically if the invisible pink hand decides it doesn't want inflation it will somehow market-prevent it (in a way that doesn't involve just defining it out of the system).
All you've done here is reinforce the fact that the design of the P2P network is broken and should be fixed, which is indeed an argument I am making, with a side order of red herring regarding the issuance schedule.

The difference between us is that I don't accept a permanently broken P2P network as a given and conclude that we should employ broken economics as a work around.

The broken economics of having a block size limit, and the broken P2P network should both be fixed.
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February 05, 2015, 08:37:43 PM
 #140

The assertion that a fee market only works if miners act as a cartel is false.  The situation in which miners do not act as a cartel simply presents the consumer with a range of prices which they can choose among, paying a premium if they are willing to pay for high-priority or prompt service or taking a discount for making low-priority or slow transactions.

Imagine a market in which there is no cartel.  To make it simple, suppose that there are ten miners each with ten percent of the hashing power, and that the block size limit is not routinely reached.  Because they are economically rational and facing different prices for bandwidth and electricity in their respective neighborhoods, they all set different minimum-fee policies.

The consumer is faced with ten different price points for a "minimum acceptable" fee, which determines how many of these miners would accept his or her transaction.  

So... paying a minimum fee would get your tx accepted by one miner.  On average you're going to have to wait ten blocks before that miner gets a block, so your expected tx time is about 100 minutes.  Paying a median fee would get your tx accepted by any of five miners.  On average you're going to have to wait two blocks before one of those five gets a block, so 20 minutes.  Paying the highest fee would get your tx into any block regardless of who mines it, so you'll be in the very next block in around 10 minutes.  

The point is that consumers are not faced with a binary "pay enough" or "don't pay anything" choice; they are faced instead with the opportunity to select a level of responsiveness desired and pay for the priority they want or need on a by-transaction basis.  

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