đź“… Original date posted:2022-07-14
đź“ť Original message:@Peter Todd
> The fact of the matter is that the present amount of security is about
1.7% of
the total coin supply/year
That's on the order of what I calculated
<https://github.com/fresheneesz/quantificationOfConsensusProtocolSecurity#analysis-of-various-consensus-algorithms>;:
~0.5%. I'm curious where the 1.7% number comes from. Perhaps much of the
difference in our two numbers likely comes from me incorporating what I
call the "Economic Mining Monopoly Attack"
<https://github.com/fresheneesz/quantificationOfConsensusProtocolSecurity#economic-mining-monopoly-attack>;
which effectively cuts the security in half.
> There's zero reason to stress about finding an "optimal" amount. An
amount low enough to be easily affordable, but non-zero, is fine.
That's fair. What I mean is that we should estimate an optimal value to
some degree of accuracy. It doesn't have to be super accurate. But too low
and we could have a bad time. Too high and its a deadweight cost forever
(which increases fees, slows adoption, and causes an inflation-like
devaluation force on bitcoin, which has all the familiar market distorting
effects, albeit to a much smaller degree than we're used to). In any case,
we need to come to an accurate enough estimate of how much is enough
security so that we ensure we're above that amount.
> These are all amounts that are likely to be dwarfed by economic shifts.
Perhaps you're right. Regardless, its certainly an improvement to what
we've had the last 100 years.
@Erik Voskuil
> You cannot support the blanket statement (and absent any assumption) that
lower confirmation rates produce “much higher fees” or “better security”.
I can in fact support it. The theory of supply and demand supports it.
Well, depending on what you mean by "fees". Reducing the block size will
certainly increase average fees/vbyte. Whether it increases total fees
collected by miners (and thus lead to "better security") is another story -
a story that depends on the demand dynamics in the market. It could very
well be that reducing the blocksize reduces the number of transactions by a
higher proportion than fees go up. As we have seen in past periods of high
traffic tho, total fees go up *quite* a lot. So it seems pretty clear to me
that constraining the block size would very likely increase total fees
collected by miners, at least for the near future.
@Carvalho
> I will reiterate. Proof of work and the difficulty adjustment scheme
already solve all of these issues
You haven't addressed any of the comments that disagree with you above. You
didn't address any of my comments originally. You are simply claiming
things without any logical support. If you want to be a respectable part of
this conversation, I'd recommend explaining yourself much more thoroughly.
> That restaurant is too popular, nobody goes there anymore.
If you could feed 100,000 people with 1 entire from a restaurant, your
restaurant might not make enough money to survive despite feeding the
entire country. That's what the lightning network does for/to bitcoin. We
need to make sure the restaurant can afford to staff itself despite massive
increases in food-use efficiency.
On Fri, Jul 8, 2022 at 12:32 PM Erik Aronesty via bitcoin-dev <
bitcoin-dev at lists.linuxfoundation.org> wrote:
> On Thu, Jul 7, 2022 at 8:29 PM Eric Voskuil <eric at voskuil.org> wrote:
>
>> Value is subjective, though a constraint of 1tx per 10 minutes seems
>> unlikey to create a fee of 5000x that of 5000tx. This is of course why I
>> stated my assumption. Yet this simple example should make clear that at
>> some point a reduction in confirmation rate reduces reward. Otherwise a
>> rate of zero implies infinite reward.
>>
>
> Like i said, it's not linear. So no, a rate of 0 does not imply an
> infinite reward. A number of papers on the Nash equilibrium of mining
> rewards and block size have been written. There are block sizes that
> are optimal for fees, and they obviously not zero, where the system
> collapses, and they are obviously not infinite... where all bidders pay 1
> sat/byte.
>
>
>>
>> You cannot support the blanket statement (and absent any assumption) that
>> lower confirmation rates produce “much higher fees” or “better security”.
>>
>
> You can look at the research and the history of zero-size block impact on
> fees and see that this is true.
>
>
>
>>
>> What you call a “bidding war” is merely market pricing, as it occurs with
>> any good. People *always* will pay as much as they will pay. This is
>> tautological. What you cannot say is how much more someone will pay at any
>> given time for any given good, until they have done it. And I’m pretty sure
>> Bitcoin hasn’t done it.
>>
>
> If there is infinite supply, then there is zero value. Infinite blocks
> have lower fees. This is impossible to argue against.
>
>
>> You cannot prove what the price of anything will be, nor can any
>> “papers”. The absurdity of S2F should have clearly demonstrated that by
>> now. Value is an individual human preference.
>>
>
> A trivial example: block sizeof 10, and 10 people want to transact, all
> can bid 1 SAT/byte, 2 tx are moving 100 mil sats, the other 8 are moving 10
> mil sats. Block size of 2. Now the two transactions moving 100 mil sats
> will bid, they can easily pay 400 sats/byte.
>
> You can show, from history, that when block sizes are more constrained,
> due to the mining of zero byte blocks, total fees were higher. People
> will always pay for "next confirm" if the cost of that is very reasonable
> (less than 0.1%).
>
>>
>> If everyone pays 1 sat, then either miners are profitable at 1 sat, or
>> these people are not getting confirmed (economic rationality always
>> assumed).
>>
>
> Yes, and if miners are not profitable at 1 sat, then they will not mine,
> and the hash rate will drop. And this reduces the security of the coin.
> Hashrate is an index of security.
>
> But there is of course no real issue here. Simply fork off an inflation
>> coin and test your theory. I mean, that’s the only way it can happen anyway.
>>
>
> I would argue inflation is not a good solution. Instead, being cautious
> about block-compressing tech, like mweb, and being more aggressive about
> fee-driving tech, makes more sense .
>
> _______________________________________________
> bitcoin-dev mailing list
> bitcoin-dev at lists.linuxfoundation.org
> https://lists.linuxfoundation.org/mailman/listinfo/bitcoin-dev
>
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Billy Tetrud [ARCHIVE] /
npub1xq…tcnns
2023-06-07 23:11:08
in reply to nevent1q…nxle
Author Public Key
npub1xqcwcttsyk0a64d63crrwsxp88pa42np37rw87hrfn4uku78g2aqltcnnsPublished at
2023-06-07 23:11:08Event JSON
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"content": "📅 Original date posted:2022-07-14\n📝 Original message:@Peter Todd\n\n\u003e The fact of the matter is that the present amount of security is about\n1.7% of\nthe total coin supply/year\n\nThat's on the order of what I calculated\n\u003chttps://github.com/fresheneesz/quantificationOfConsensusProtocolSecurity#analysis-of-various-consensus-algorithms\u003e:\n~0.5%. I'm curious where the 1.7% number comes from. Perhaps much of the\ndifference in our two numbers likely comes from me incorporating what I\ncall the \"Economic Mining Monopoly Attack\"\n\u003chttps://github.com/fresheneesz/quantificationOfConsensusProtocolSecurity#economic-mining-monopoly-attack\u003e\nwhich effectively cuts the security in half.\n\n\u003e There's zero reason to stress about finding an \"optimal\" amount. An\namount low enough to be easily affordable, but non-zero, is fine.\n\nThat's fair. What I mean is that we should estimate an optimal value to\nsome degree of accuracy. It doesn't have to be super accurate. But too low\nand we could have a bad time. Too high and its a deadweight cost forever\n(which increases fees, slows adoption, and causes an inflation-like\ndevaluation force on bitcoin, which has all the familiar market distorting\neffects, albeit to a much smaller degree than we're used to). In any case,\nwe need to come to an accurate enough estimate of how much is enough\nsecurity so that we ensure we're above that amount.\n\n\u003e These are all amounts that are likely to be dwarfed by economic shifts.\n\nPerhaps you're right. Regardless, its certainly an improvement to what\nwe've had the last 100 years.\n\n@Erik Voskuil\n\u003e You cannot support the blanket statement (and absent any assumption) that\nlower confirmation rates produce “much higher fees” or “better security”.\n\nI can in fact support it. The theory of supply and demand supports it.\nWell, depending on what you mean by \"fees\". Reducing the block size will\ncertainly increase average fees/vbyte. Whether it increases total fees\ncollected by miners (and thus lead to \"better security\") is another story -\na story that depends on the demand dynamics in the market. It could very\nwell be that reducing the blocksize reduces the number of transactions by a\nhigher proportion than fees go up. As we have seen in past periods of high\ntraffic tho, total fees go up *quite* a lot. So it seems pretty clear to me\nthat constraining the block size would very likely increase total fees\ncollected by miners, at least for the near future.\n\n@Carvalho\n\u003e I will reiterate. Proof of work and the difficulty adjustment scheme\nalready solve all of these issues\n\nYou haven't addressed any of the comments that disagree with you above. You\ndidn't address any of my comments originally. You are simply claiming\nthings without any logical support. If you want to be a respectable part of\nthis conversation, I'd recommend explaining yourself much more thoroughly.\n\n\u003e That restaurant is too popular, nobody goes there anymore.\n\nIf you could feed 100,000 people with 1 entire from a restaurant, your\nrestaurant might not make enough money to survive despite feeding the\nentire country. That's what the lightning network does for/to bitcoin. We\nneed to make sure the restaurant can afford to staff itself despite massive\nincreases in food-use efficiency.\n\nOn Fri, Jul 8, 2022 at 12:32 PM Erik Aronesty via bitcoin-dev \u003c\nbitcoin-dev at lists.linuxfoundation.org\u003e wrote:\n\n\u003e On Thu, Jul 7, 2022 at 8:29 PM Eric Voskuil \u003ceric at voskuil.org\u003e wrote:\n\u003e\n\u003e\u003e Value is subjective, though a constraint of 1tx per 10 minutes seems\n\u003e\u003e unlikey to create a fee of 5000x that of 5000tx. This is of course why I\n\u003e\u003e stated my assumption. Yet this simple example should make clear that at\n\u003e\u003e some point a reduction in confirmation rate reduces reward. Otherwise a\n\u003e\u003e rate of zero implies infinite reward.\n\u003e\u003e\n\u003e\n\u003e Like i said, it's not linear. So no, a rate of 0 does not imply an\n\u003e infinite reward. A number of papers on the Nash equilibrium of mining\n\u003e rewards and block size have been written. There are block sizes that\n\u003e are optimal for fees, and they obviously not zero, where the system\n\u003e collapses, and they are obviously not infinite... where all bidders pay 1\n\u003e sat/byte.\n\u003e\n\u003e\n\u003e\u003e\n\u003e\u003e You cannot support the blanket statement (and absent any assumption) that\n\u003e\u003e lower confirmation rates produce “much higher fees” or “better security”.\n\u003e\u003e\n\u003e\n\u003e You can look at the research and the history of zero-size block impact on\n\u003e fees and see that this is true.\n\u003e\n\u003e\n\u003e\n\u003e\u003e\n\u003e\u003e What you call a “bidding war” is merely market pricing, as it occurs with\n\u003e\u003e any good. People *always* will pay as much as they will pay. This is\n\u003e\u003e tautological. What you cannot say is how much more someone will pay at any\n\u003e\u003e given time for any given good, until they have done it. And I’m pretty sure\n\u003e\u003e Bitcoin hasn’t done it.\n\u003e\u003e\n\u003e\n\u003e If there is infinite supply, then there is zero value. Infinite blocks\n\u003e have lower fees. This is impossible to argue against.\n\u003e\n\u003e\n\u003e\u003e You cannot prove what the price of anything will be, nor can any\n\u003e\u003e “papers”. The absurdity of S2F should have clearly demonstrated that by\n\u003e\u003e now. Value is an individual human preference.\n\u003e\u003e\n\u003e\n\u003e A trivial example: block sizeof 10, and 10 people want to transact, all\n\u003e can bid 1 SAT/byte, 2 tx are moving 100 mil sats, the other 8 are moving 10\n\u003e mil sats. Block size of 2. Now the two transactions moving 100 mil sats\n\u003e will bid, they can easily pay 400 sats/byte.\n\u003e\n\u003e You can show, from history, that when block sizes are more constrained,\n\u003e due to the mining of zero byte blocks, total fees were higher. People\n\u003e will always pay for \"next confirm\" if the cost of that is very reasonable\n\u003e (less than 0.1%).\n\u003e\n\u003e\u003e\n\u003e\u003e If everyone pays 1 sat, then either miners are profitable at 1 sat, or\n\u003e\u003e these people are not getting confirmed (economic rationality always\n\u003e\u003e assumed).\n\u003e\u003e\n\u003e\n\u003e Yes, and if miners are not profitable at 1 sat, then they will not mine,\n\u003e and the hash rate will drop. And this reduces the security of the coin.\n\u003e Hashrate is an index of security.\n\u003e\n\u003e But there is of course no real issue here. Simply fork off an inflation\n\u003e\u003e coin and test your theory. I mean, that’s the only way it can happen anyway.\n\u003e\u003e\n\u003e\n\u003e I would argue inflation is not a good solution. Instead, being cautious\n\u003e about block-compressing tech, like mweb, and being more aggressive about\n\u003e fee-driving tech, makes more sense .\n\u003e\n\u003e _______________________________________________\n\u003e bitcoin-dev mailing list\n\u003e bitcoin-dev at lists.linuxfoundation.org\n\u003e https://lists.linuxfoundation.org/mailman/listinfo/bitcoin-dev\n\u003e\n-------------- next part --------------\nAn HTML attachment was scrubbed...\nURL: \u003chttp://lists.linuxfoundation.org/pipermail/bitcoin-dev/attachments/20220713/ee9b842f/attachment-0001.html\u003e",
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