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>as long as the transaction has a reasonable fee attached to it, you can proceed immediately (this is called a 0-conf transaction) Not true. A 0-conf transacti

>as long as the transaction has a reasonable fee attached to it, you can proceed immediately (this is called a 0-conf transaction) Not true. A 0-conf transaction is a transaction which has not been confirmed at all, which is orthogonal to its fee. A transaction with a reasonable fee may not even be confirmed at all, as it only takes a few days to fall out of every mempool and average fees are currently unreasonable, so it is not safe to trust 0-conf transactions currently as they may never make it on-chain.

CydeWeys 9y ago
If a transaction fails to be confirmed for several days, then its fee was by definition not reasonable; it was too small. A fee significantly smaller than the average fee on transactions making it into blocks is unreasonably small.
- rtb 9y ago
  By that definition, your first comment was a meaningless tautology. If a "reasonable" fee is one that causes a transaction to be accepted, then your first comment can be rewritten as: "as long as the transaction [will be confirmed within several days], you can be pretty sure that it will be confirmed eventually".
  - CydeWeys 9y ago
    You can tell, based on the fee, whether it's sufficient for the transaction to be confirmed soon, and if so, accept it immediately. This isn't hard, and I don't believe that you didn't actually understand it. I don't understand what value your replies have added.
grandalf 9y ago
The question to ask is why are the fees high? Because the demand for faster transactions is very high. While this seems like a technical glitch to some, it is easily addressed using traditional finance techniques or via side chains. Fees exist to incentivize miners to participate, and so "unreasonably high" fees should result in more miners participating and fees going down. Due to the scale of Bitcoin, adding non-trivially to the mining capacity takes a pretty massive investment, so we should expect a gradual correction. Overall this is a good thing because it enhances the overall cryptosystem significantly while clearly signaling (via the price) what needs to happen. While it is tempting to solve this technocratically, I'd argue that institutional stability (even if it seems a bit like calcification) is extremely valuable to the formation of long term incentives and risk-taking for the ecosystem as a whole.
- nas 9y ago
  More miners will not make the fees go down. The limited resource is space in each block, currently 1 MB. Having more miners does not increase the block size. It would be nice to have a proper economic feedback mechanism on this, e.g. miners decide how big to make the block based on how high the fees are getting. However, the costs for big blocks are externalized and so I think miners would make blocks as big as possible to capture as many fees as possible. The cost of storing those blocks in perpetuity costs the whole Bitcoin ecosystem. I consider this a major crisis for Bitcoin as with current fees, the system is not very useful. The original thinking was that block sizes could be increased a lot and provide transaction rates that match what credit card companies can do. Current Bitcoin core developers and miners can't seem to increase the block size, each blames the other for inaction. Some suggest the core team is mostly controlled by Blockstream and their business model depends on expensive transactions forcing people to use their Lightning network instead. Miners are fine with high fees as long as the Bitcoin price doesn't collapse. I don't know how this will play out. Perhaps some clever idea will come forth to solve the scaling problems. If so, Bitcoin should continue to be adopted and rise in price. If things say deadlocked, I could see Bitcoin wither away as other crypto-coins do the same job but for lower transaction fees.
  - grandalf 9y ago
    Great points. It could be argued that adjusting a parameter like block size should be easy and that this not being possible is a design limitation of Bitcoin. However if you consider that miners (or more abstractly, mining rigs themselves) are easily repurposed to mine a BTC fork which could potentially include a larger block size from the start. So the conflict is between the beneficial network effects of BTC and the transaction cost imposed by arguably "bad" governance (corrupt governance, if the rumor you mention is true). There are lots of interesting incentives that apply to BTC at scale that are hard to predict when reading the paper. I think we'll see a very messy world of many competing cryptocurrencies and difficult-to-understand layers of overly centralized governance resulting in layers upon layers of perverted incentives. But the silver lining is that the blockchain is a nice way to offer the kind of transparency that could make a system like that actually far better than the kind of messes we end up in with fiat currencies :)

CydeWeys 9y ago

If a transaction fails to be confirmed for several days, then its fee was by definition not reasonable; it was too small. A fee significantly smaller than the average fee on transactions making it into blocks is unreasonably small.

rtb 9y ago
By that definition, your first comment was a meaningless tautology. If a "reasonable" fee is one that causes a transaction to be accepted, then your first comment can be rewritten as: "as long as the transaction [will be confirmed within several days], you can be pretty sure that it will be confirmed eventually".
- CydeWeys 9y ago
  You can tell, based on the fee, whether it's sufficient for the transaction to be confirmed soon, and if so, accept it immediately. This isn't hard, and I don't believe that you didn't actually understand it. I don't understand what value your replies have added.

grandalf 9y ago

The question to ask is why are the fees high? Because the demand for faster transactions is very high. While this seems like a technical glitch to some, it is easily addressed using traditional finance techniques or via side chains. Fees exist to incentivize miners to participate, and so "unreasonably high" fees should result in more miners participating and fees going down. Due to the scale of Bitcoin, adding non-trivially to the mining capacity takes a pretty massive investment, so we should expect a gradual correction. Overall this is a good thing because it enhances the overall cryptosystem significantly while clearly signaling (via the price) what needs to happen. While it is tempting to solve this technocratically, I'd argue that institutional stability (even if it seems a bit like calcification) is extremely valuable to the formation of long term incentives and risk-taking for the ecosystem as a whole.

nas 9y ago
More miners will not make the fees go down. The limited resource is space in each block, currently 1 MB. Having more miners does not increase the block size. It would be nice to have a proper economic feedback mechanism on this, e.g. miners decide how big to make the block based on how high the fees are getting. However, the costs for big blocks are externalized and so I think miners would make blocks as big as possible to capture as many fees as possible. The cost of storing those blocks in perpetuity costs the whole Bitcoin ecosystem. I consider this a major crisis for Bitcoin as with current fees, the system is not very useful. The original thinking was that block sizes could be increased a lot and provide transaction rates that match what credit card companies can do. Current Bitcoin core developers and miners can't seem to increase the block size, each blames the other for inaction. Some suggest the core team is mostly controlled by Blockstream and their business model depends on expensive transactions forcing people to use their Lightning network instead. Miners are fine with high fees as long as the Bitcoin price doesn't collapse. I don't know how this will play out. Perhaps some clever idea will come forth to solve the scaling problems. If so, Bitcoin should continue to be adopted and rise in price. If things say deadlocked, I could see Bitcoin wither away as other crypto-coins do the same job but for lower transaction fees.
- grandalf 9y ago
  Great points. It could be argued that adjusting a parameter like block size should be easy and that this not being possible is a design limitation of Bitcoin. However if you consider that miners (or more abstractly, mining rigs themselves) are easily repurposed to mine a BTC fork which could potentially include a larger block size from the start. So the conflict is between the beneficial network effects of BTC and the transaction cost imposed by arguably "bad" governance (corrupt governance, if the rumor you mention is true). There are lots of interesting incentives that apply to BTC at scale that are hard to predict when reading the paper. I think we'll see a very messy world of many competing cryptocurrencies and difficult-to-understand layers of overly centralized governance resulting in layers upon layers of perverted incentives. But the silver lining is that the blockchain is a nice way to offer the kind of transparency that could make a system like that actually far better than the kind of messes we end up in with fiat currencies :)