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In-Reply-To: <20150212064719.GA6563@savin.petertodd.org>
References: <20150212064719.GA6563@savin.petertodd.org>
Date: Thu, 12 Feb 2015 12:58:16 +0100
Message-ID: <CANEZrP2uVT_UqJbzyQcEbiS78T68Jj2cH7OGXv5QtYiCwArDdA@mail.gmail.com>
From: Mike Hearn <mike@plan99.net>
To: Peter Todd <pete@petertodd.org>
Content-Type: multipart/alternative; boundary=047d7bb7092cd1f470050ee2d574
Cc: Bitcoin Dev <bitcoin-development@lists.sourceforge.net>
Subject: Re: [Bitcoin-development] replace-by-fee v0.10.0rc4
Precedence: list

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I know you will ignore this as usual, but the entire replace-by-fee folly
is based on your fundamental misunderstanding of miner incentives.

Miners are *not* incentivised to earn the most money in the next block
possible. They are incentivised to maximise their return on investment.
Making Bitcoin much less useful reduces demand for the bitcoins they are
mining, reducing coinbase and fee income in future blocks. Quite possibly,
to the point where those miners are then making a loss.

Your "scorched earth" plan is aptly named, as it's guaranteed to make
unconfirmed payments useless. If enough miners do it they will simply break
Bitcoin to the point where it's no longer an interesting payments system
for lots of people. Then miners who have equipment to pay off will be
*really* screwed, not to mention payment processors and all the investors
in them.

I'm sure you can confuse a few miners into thinking your ideas are a
super-duper way to maximise their income, and in the process might
facilitate a pile of payment fraud. But they aren't. This one is about as
sensible as your "let's never increase the block size"  and "let's kill SPV
clients" crusades - badly thought out and bad for Bitcoin.

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<div dir=3D"ltr"><div class=3D"gmail_extra">I know you will ignore this as =
usual, but the entire replace-by-fee folly is based on your fundamental mis=
understanding of miner incentives.</div><div class=3D"gmail_extra"><br></di=
v><div class=3D"gmail_extra">Miners are <b>not</b>=C2=A0incentivised to ear=
n the most money in the next block possible. They are incentivised to maxim=
ise their return on investment. Making Bitcoin much less useful reduces dem=
and for the bitcoins they are mining, reducing coinbase and fee income in f=
uture blocks. Quite possibly, to the point where those miners are then maki=
ng a loss.<br></div><div class=3D"gmail_extra"><br></div><div class=3D"gmai=
l_extra">Your &quot;scorched earth&quot; plan is aptly named, as it&#39;s g=
uaranteed to make unconfirmed payments useless. If enough miners do it they=
 will simply break Bitcoin to the point where it&#39;s no longer an interes=
ting payments system for lots of people. Then miners who have equipment to =
pay off will be <i>really</i>=C2=A0screwed, not to mention payment processo=
rs and all the investors in them.</div><div class=3D"gmail_extra"><br></div=
><div class=3D"gmail_extra">I&#39;m sure you can confuse a few miners into =
thinking your ideas are a super-duper way to maximise their income, and in =
the process might facilitate a pile of payment fraud. But they aren&#39;t. =
This one is about as sensible as your &quot;let&#39;s never increase the bl=
ock size&quot; =C2=A0and &quot;let&#39;s kill SPV clients&quot; crusades - =
badly thought out and bad for Bitcoin.</div></div>

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