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+Subject: Re: [bitcoin-dev] "A Transaction Fee Market Exists Without a Block

+ Size Limit"--new research paper suggests

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+

+On 8/5/2015 3:44 PM, Dave Hudson via bitcoin-dev wrote:

+> I do suspect that if we were to model this more accurately we might be

+> able to infer the "typical" propagation characteristics by measuring

+> the deviation from the expected distribution.

+

+The paper models propagation using a single time value that is a

+function of block size. Modeling the propagation distribution (which is

+totally separate from the poisson model of block production) would add a

+lot of complexity and my guess is the outcome would be little changed.

+

+

+>> On 5 Aug 2015, at 15:15, Peter R <peter_r@gmx.com> wrote:

+>> Although a miner may not orphan his own block, by building on his own block he may now orphan two blocks in a row. At some point, his solution or solutions must be communicated to his peers.

+

+Why complicate the analysis by assuming that a miner who finds two

+blocks sequentially does not publish the first, or that other miners

+would orphan miner's first block unless both were very quick? In

+general you don't consider anything beyond 1 block in the future, which

+seems fine.

+

+

+>>> I suspect this may well change some of the conclusions as larger block makers will definitely be able to create larger blocks than their smaller counterparts.

+>> It will be interesting to see. I suspect that the main result that "a healthy fee market exists" will still hold (assuming of course that a single miner with >50% of the hash power isn't acting maliciously). Whether miners with larger value of h/H have a profit advantage, I'm not sure (but that was outside the scope of the paper anyways).

+

+Correcting for non-orphaning of one's own blocks could be as simple as

+adding a factor (1 - h/H) to equation 4, which it appears would leave

+hashpower as an independent variable in the results. But at worst, the

+discussion can be considered to apply directly only to low-hashpower

+miners right now.

+

+Overall, the paper does not predict big changes to per/kb fees or spam

+costs for the kinds of block sizes being discussed for the immediate

+future (8MB). But it does conclude that these fees will rise, not fall,

+with bigger blocks.

+

+Also it is welcome that this paper actually mentions the bitcoin

+exchange rate as a factor in relation to block size (it points out that

+a spam attack is much more expensive in fiat terms today than it was

+years ago).

+

+