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> However, any changes require consensus from the miners who create Bitcoins and process transactions, and because it's not in their best incentive to do anythi
by runeks 9y ago
> However, any changes require consensus from the miners who create Bitcoins and process transactions, and because it's not in their best incentive to do anything to reduce those transaction fees, no change has received majority consensus.
This is an unfortunate misunderstanding on the part of the miners, and the math is really simple: imagine a network on top of Bitcoin, e.g. lightning.network, which can process 10 million transactions off-chain and settle it on the Bitcoin blockchain using only a single transaction. Imagine if every one of those 10 million off-chain transactions paid just 0.01 cent in fees... this would earn the payment processor $1000, which can only be realized by publishing a Bitcoin transaction, in competition with everyone else making a lot on off-chain fees. The result is that off-chain profits (in the form of fees) would allow off-chain payment processors to pay huge blockchain fees, because they can deduce it from the profit they've made on off-chain fees. Nothing, in my opinion, will increase Bitcoin fees more than layer 2 protocols creating more users and transactions (because fees are paid per off-chain transaction).
The point some miners are missing is that one billion off-chain transactions each paying a 0.01 cent fee is more profitable than 2,000 on-chain transactions paying $1 each. And if everyone is able to earn $100,000 in fees by publishing a single Bitcoin transaction, this must push up Bitcoin fees, since people will be competing on getting into the chain with the bidding power from their earned profits.
- whiskers08xmt 9y agoI think what the miners are afraid of, is that the power of the bitcoin network, leaves their hands and fall into the hands of second layer operators. At the same time, a higher blockchain size would make it less profitable for small miners, to mine bitcoin. Bitfury recently released an analysis, that predicts that 95% of current miners, would find mining to be unprofitable at blocksize of 8MB. This would further centralize profits and power over the protocol, with the big datacenter miners.
- runeks 9y ago> Bitfury recently released an analysis, that predicts that 95% of current miners, would find mining to be unprofitable at blocksize of 8MB. I don't understand this. Due to what would 95% of current miners find mining unprofitable at 8MB blocks?
- whiskers08xmt 9y ago8mb blocks would mean that the bitcoin blockchain, would grow by 35 gigabyte a month. Compare this to the total blockchain size of about 120gb right now. This increases the cost of mining, by requiring miners to keep up on harddisk space. This cost can be amortized, as you can scale your processing independently of your harddisk space, making it even more profitable to mine for big investors, than smaller fish.
- gruez 9y ago>This increases the cost of mining, by requiring miners to keep up on harddisk space miners typically mine in pools. so they don't need to download the blockchain because the pool is doing it for them.
- duckingtest 9y agoThere's an old idea that solves the storage issue completely - utxo commitments. Literally the only real throughput limit is end user's download bandwidth, which means 500MB blocks or so for 10Mbps download. Spv clients are fine for those unfortunate to have monthly limits. >making it even more profitable to mine for big investors, than smaller fish. Both storage and bandwidth are utterly insignificant cost items in a mining operation.