Return-Path: Received: from smtp1.osuosl.org (smtp1.osuosl.org [IPv6:2605:bc80:3010::138]) by lists.linuxfoundation.org (Postfix) with ESMTP id 314CAC0032 for ; Wed, 1 Mar 2023 17:18:02 +0000 (UTC) Received: from localhost (localhost [127.0.0.1]) by smtp1.osuosl.org (Postfix) with ESMTP id 0609B80CE3 for ; Wed, 1 Mar 2023 17:18:02 +0000 (UTC) DKIM-Filter: OpenDKIM Filter v2.11.0 smtp1.osuosl.org 0609B80CE3 X-Virus-Scanned: amavisd-new at osuosl.org X-Spam-Flag: NO X-Spam-Score: 1.996 X-Spam-Level: * X-Spam-Status: No, score=1.996 tagged_above=-999 required=5 tests=[BAYES_20=-0.001, PDS_OTHER_BAD_TLD=1.999, SPF_HELO_PASS=-0.001, SPF_PASS=-0.001] autolearn=no autolearn_force=no Received: from smtp1.osuosl.org ([127.0.0.1]) by localhost (smtp1.osuosl.org [127.0.0.1]) (amavisd-new, port 10024) with ESMTP id fv8mg_qSBzuc for ; Wed, 1 Mar 2023 17:18:01 +0000 (UTC) X-Greylist: from auto-whitelisted by SQLgrey-1.8.0 DKIM-Filter: OpenDKIM Filter v2.11.0 smtp1.osuosl.org EAB2580C1F Received: from smtpauth.rollernet.us (smtpauth.rollernet.us [IPv6:2607:fe70:0:3::d]) by smtp1.osuosl.org (Postfix) with ESMTPS id EAB2580C1F for ; Wed, 1 Mar 2023 17:18:00 +0000 (UTC) Received: from smtpauth.rollernet.us (localhost [127.0.0.1]) by smtpauth.rollernet.us (Postfix) with ESMTP id 400E52800861; Wed, 1 Mar 2023 09:17:58 -0800 (PST) Received: from webmail.rollernet.us (webmail.rollernet.us [IPv6:2607:fe70:0:14::a]) (using TLSv1.2 with cipher ECDHE-RSA-AES128-GCM-SHA256 (128/128 bits)) (Client did not present a certificate) by smtpauth.rollernet.us (Postfix) with ESMTPSA; Wed, 1 Mar 2023 09:17:58 -0800 (PST) MIME-Version: 1.0 Date: Wed, 01 Mar 2023 07:17:58 -1000 From: "David A. Harding" To: Rastislav Budinsky , Bitcoin Protocol Discussion In-Reply-To: References: User-Agent: Roundcube Webmail/1.4.10 Message-ID: X-Sender: dave@dtrt.org Content-Type: text/plain; charset=US-ASCII; format=flowed Content-Transfer-Encoding: 7bit X-Rollernet-Abuse: Contact abuse@rollernet.us to report. Abuse policy: http://www.rollernet.us/policy X-Rollernet-Submit: Submit ID 208.63ff88c6.1c9d2.0 Subject: Re: [bitcoin-dev] BIP proposal: Fee-redistribution contracts X-BeenThere: bitcoin-dev@lists.linuxfoundation.org X-Mailman-Version: 2.1.15 Precedence: list List-Id: Bitcoin Protocol Discussion List-Unsubscribe: , List-Archive: List-Post: List-Help: List-Subscribe: , X-List-Received-Date: Wed, 01 Mar 2023 17:18:02 -0000 On 2023-02-27 03:32, Rastislav Budinsky via bitcoin-dev wrote: > When a miner mines a block he takes all the fees currently. However > with the proposed solution he takes only fraction M and remaining > fraction C is sent to one of more contracts. One contract at its > simplest collects fees from the miner and at the same time > redistributes it back to the miner. Hi Rastislav, I think you've incorrectly made the assumption that the only way a miner can profit from confirming a transaction is by collecting its transaction fees. Miners can (and many have) accept payment through alternative means, which the Bitcoin technical community often calls "out-of-band fees".[1] For example, some miners have provided a "transaction accelerator" service that accepts fiat-denominated credit cards to increase their prioritization of certain transactions and I'm personally aware of a large web wallet provider that would occasionally pay miners out of band to confirm hundreds or thousands of transactions rather than fix its broken fee estimation. Out-of-band fees aren't frequently used in Bitcoin today because they have no advantage over correctly estimated in-band fees, and good fee estimation is very accessible to modern wallets. However, if the consensus rules are changed to require each miner pay a percentage of its in-band fees to future miners, then there would be a strong incentive for them to prefer out-of-band fees that weren't subject to this redistribution scheme. I think may have seen a variation on the scheme you propose play out in real life. Here's how it works where I live: the government imposes taxes on goods, services, and income. Ostensibly, it redistributes the collected funds back to citizens in the future by providing government services. When I go to pay someone who trusts my discretion, they often offer me a discounted rate if I pay in a way that isn't reported to the government (e.g., I pay with cash); even with the discount provided to me, they get to keep more of their income than if they had reported the transaction to the government. In the case of a government, tax evasion can be reduced by the deployment of investigators and enforcers. In Bitcoin, we have no control over activity that happens outside of the protocol and so even a modest incentive to pay fees out of band might quickly lead to almost all fees being paid out of band. This prevents the effective redistribution of fees as in your proposal. Additionally, previous discussions on this mailing list about paying out-of-band fees have highlighted that larger miners have an advantage over smaller miners in collecting miner-specific fee payments, undermining the essential decentralization of Bitcoin's transaction confirmation mechanism (moreso than it is already weakened by fundamental economies of scale in mining). In short, I think serious consideration of your proposal can only proceed if it adequately addresses the problem of out-of-band fees. That said, thank you and your co-authors for putting serious thought into Bitcoin's long-term economic incentives. -Dave [1] https://bitcoinsearch.xyz/?q=out%20of%20band%20fees&size=n_50_n