7 ms·

Bitcoin Core switching from hard-coded to flexible fees in next major release

176 points by FatalLogic 12y ago

nazgulnarsil 12y ago
One of two major problems solved. Now they need to fix block sizes before miners are organized enough and tx fees are high enough to incentivize small block sizes.
- wcoenen 12y ago
  Smaller block sizes are already advantageous because they propagate faster, so they have a lower risk of being orphaned. A purely rational miner should only add a transaction if its transaction fee outweighs the increased orphan risk.
  - nazgulnarsil 12y ago
    That is an artifact of the current system, which as Gavin mentions, can probably be fixed.
deleted 12y ago
[deleted]
- JetSpiegel 12y ago
  If they don't, Bitcoin is irrelevant. If they do, they get the keys of the castle.
ars 12y ago
This sounds like a good idea, but won't really change anything since everyone will have to pay the new fees, and it's just an arms race. It does not fix this problem: "and if there are more transactions than will fit they take the highest-fee transactions first." So what he's saying is that the bitcoin network can not handle the typical volume of transactions? So you have to prioritize things? If it can't do it now, today, when it's small, there is simply no way bitcoin is going to grow, which is troubling for the future of bitcoin. The requirement that every transaction is recorded forever is already causing problem (the block chain is HUGE). And the fees are just a method to try to reduce the side of the data. Instead a completely different method should be used: A cleanup cycle where old blocks are consolidated and discarded. (The miners agree that the new block is valid, then the old block is no longer needed.) (Also as a side note bitcoin will never survive past the last mined block. Miners will not continue to mine just for fees, but the amount of entrenched hashing power in place by then means that destroying the network will be trivial for people.)
- voxic11 12y ago
  there is no last block...
  - jMyles 12y ago
    Last mined block. I assume she (he?) was talking about the last block for which a block discovery fee is paid.
    - haakon 12y ago
      I'm pretty sure you're right about what she was talking about, but to be clear about terminology, all blocks are "mined". To quote the Bitcoin wiki, "Mining is the process of adding transaction records to Bitcoin's public ledger of past transactions."
    - xorcist 12y ago
      The transaction fees are part of what you call the block discovery fee. As long as there is someone left running the software, blocks will be mined.
- wmf 12y ago
  So what he's saying is that the bitcoin network can not handle the typical volume of transactions? So you have to prioritize things? If it can't do it now, today, when it's small, there is simply no way bitcoin is going to grow, which is troubling for the future of bitcoin. Right now miners aren't creating full 1MB blocks because each transaction has a pretty high orphan cost, but this can be fixed (as mentioned in the post). The requirement that every transaction is recorded forever is already causing problem ... Instead a completely different method should be used: A cleanup cycle where old blocks are consolidated and discarded. This is more or less being worked on under the name "ultimate blockchain compression". Miners will not continue to mine just for fees It's not obvious that this is the case, but there could be a problem if the 1MB block size limit is still in place at the next reward halving.
- pmorici 12y ago
  Have you actually looked at these issues in any detail because I'm fairly certain there are solutions to most of the objections you are raising. You don't need to store the whole block chain there are methods to prune it so to speak so that it takes up significantly less space. The Bitcoin client Multibit already does this. As the transaction volume of the Bitcoin network picks up they can increase the block size so more transactions can be included per block. More transactions means more fees per block. The right combination of transaction volume, block size, and Bitcoin value could certainly make mining for only transaction fees profitable.
IgorPartola 12y ago
Will this change let me have my transactions confirmed faster than currently possible if I pay higher Tx fees? Similarly, can I pay next to nothing and have the Tx confirmed eventually?
- gibybo 12y ago
  In principle you can already do this. Whether it works or not depends on the mining pools though, not necessarily this protocol change (although it may influence them). Some pools will prioritize transactions with higher fees, some will prioritize first come first serve after a minimum fee.
  - throwaway889 12y ago
    > Some pools will prioritize transactions with higher fees, some will prioritize first come first serve after a minimum fee. Are there really any pools that don't prioritise higher-fee txn?
- xorcist 12y ago
  Yes. Note that the recent FBI Bitcoin sale used no tx fees at all. It's a function of how many inputs the transaction have and how mature they are. Details are at the wiki.
  - maaku 12y ago
    That's how the reference client works. That's not necessarily how miners operate. If they're acting in self-interest, they'd accept fee-per-kb irregardless of priority.
zmanian 12y ago
In proof of work cryptocurrencies, transaction fees will become increasing important. Mines need feedback loops with users to ensure that transaction fees are high enough to avoid congestion in transaction processing. As the blockreward drops, transaction fees will also need to high enough to sustain enough economic interest in mining to protect against 50.1% attacks on the blockchain.

176 points by FatalLogic 12y ago

One of two major problems solved. Now they need to fix block sizes before miners are organized enough and tx fees are high enough to incentivize small block sizes.

wcoenen 12y ago
Smaller block sizes are already advantageous because they propagate faster, so they have a lower risk of being orphaned. A purely rational miner should only add a transaction if its transaction fee outweighs the increased orphan risk.
- nazgulnarsil 12y ago
  That is an artifact of the current system, which as Gavin mentions, can probably be fixed.

deleted 12y ago

[deleted]

JetSpiegel 12y ago
If they don't, Bitcoin is irrelevant. If they do, they get the keys of the castle.

ars 12y ago

This sounds like a good idea, but won't really change anything since everyone will have to pay the new fees, and it's just an arms race. It does not fix this problem: "and if there are more transactions than will fit they take the highest-fee transactions first." So what he's saying is that the bitcoin network can not handle the typical volume of transactions? So you have to prioritize things? If it can't do it now, today, when it's small, there is simply no way bitcoin is going to grow, which is troubling for the future of bitcoin. The requirement that every transaction is recorded forever is already causing problem (the block chain is HUGE). And the fees are just a method to try to reduce the side of the data. Instead a completely different method should be used: A cleanup cycle where old blocks are consolidated and discarded. (The miners agree that the new block is valid, then the old block is no longer needed.) (Also as a side note bitcoin will never survive past the last mined block. Miners will not continue to mine just for fees, but the amount of entrenched hashing power in place by then means that destroying the network will be trivial for people.)

voxic11 12y ago
there is no last block...
- jMyles 12y ago
  Last mined block. I assume she (he?) was talking about the last block for which a block discovery fee is paid.
  - haakon 12y ago
    I'm pretty sure you're right about what she was talking about, but to be clear about terminology, all blocks are "mined". To quote the Bitcoin wiki, "Mining is the process of adding transaction records to Bitcoin's public ledger of past transactions."
  - xorcist 12y ago
    The transaction fees are part of what you call the block discovery fee. As long as there is someone left running the software, blocks will be mined.
wmf 12y ago
So what he's saying is that the bitcoin network can not handle the typical volume of transactions? So you have to prioritize things? If it can't do it now, today, when it's small, there is simply no way bitcoin is going to grow, which is troubling for the future of bitcoin. Right now miners aren't creating full 1MB blocks because each transaction has a pretty high orphan cost, but this can be fixed (as mentioned in the post). The requirement that every transaction is recorded forever is already causing problem ... Instead a completely different method should be used: A cleanup cycle where old blocks are consolidated and discarded. This is more or less being worked on under the name "ultimate blockchain compression". Miners will not continue to mine just for fees It's not obvious that this is the case, but there could be a problem if the 1MB block size limit is still in place at the next reward halving.
pmorici 12y ago
Have you actually looked at these issues in any detail because I'm fairly certain there are solutions to most of the objections you are raising. You don't need to store the whole block chain there are methods to prune it so to speak so that it takes up significantly less space. The Bitcoin client Multibit already does this. As the transaction volume of the Bitcoin network picks up they can increase the block size so more transactions can be included per block. More transactions means more fees per block. The right combination of transaction volume, block size, and Bitcoin value could certainly make mining for only transaction fees profitable.

IgorPartola 12y ago

Will this change let me have my transactions confirmed faster than currently possible if I pay higher Tx fees? Similarly, can I pay next to nothing and have the Tx confirmed eventually?

gibybo 12y ago
In principle you can already do this. Whether it works or not depends on the mining pools though, not necessarily this protocol change (although it may influence them). Some pools will prioritize transactions with higher fees, some will prioritize first come first serve after a minimum fee.
- throwaway889 12y ago
  > Some pools will prioritize transactions with higher fees, some will prioritize first come first serve after a minimum fee. Are there really any pools that don't prioritise higher-fee txn?
xorcist 12y ago
Yes. Note that the recent FBI Bitcoin sale used no tx fees at all. It's a function of how many inputs the transaction have and how mature they are. Details are at the wiki.
- maaku 12y ago
  That's how the reference client works. That's not necessarily how miners operate. If they're acting in self-interest, they'd accept fee-per-kb irregardless of priority.

zmanian 12y ago

In proof of work cryptocurrencies, transaction fees will become increasing important. Mines need feedback loops with users to ensure that transaction fees are high enough to avoid congestion in transaction processing. As the blockreward drops, transaction fees will also need to high enough to sustain enough economic interest in mining to protect against 50.1% attacks on the blockchain.