Return-Path: Received: from smtp1.linuxfoundation.org (smtp1.linux-foundation.org [172.17.192.35]) by mail.linuxfoundation.org (Postfix) with ESMTPS id 4970A898 for ; Sun, 30 Aug 2015 20:09:02 +0000 (UTC) X-Greylist: domain auto-whitelisted by SQLgrey-1.7.6 Received: from mout.gmx.net (mout.gmx.net [212.227.15.18]) by smtp1.linuxfoundation.org (Postfix) with ESMTPS id B5742194 for ; Sun, 30 Aug 2015 20:09:01 +0000 (UTC) Received: from [192.168.50.29] ([69.50.179.106]) by mail.gmx.com (mrgmx001) with ESMTPSA (Nemesis) id 0LbMmA-1Ypu8x1mKQ-00kugV; Sun, 30 Aug 2015 22:08:58 +0200 Content-Type: multipart/alternative; boundary="Apple-Mail=_A626710B-3D53-4A85-A348-EDDCB866C4AA" Mime-Version: 1.0 (Mac OS X Mail 6.6 \(1510\)) From: Peter R In-Reply-To: Date: Sun, 30 Aug 2015 13:08:58 -0700 Message-Id: <8A71E9FB-1901-4044-B2E0-04DEFE58C045@gmx.com> References: <1438640036.2828.0.camel@auspira.com> <6ED57388-6EC3-4515-BF3F-E753301537AB@gmx.com> <6FED5604-4A6F-4CE1-B42E-36626375D557@gmx.com> <6BA86443-7534-4AAA-92BC-EC9B1603DE5F@gmx.com> <27B16AB4-0DAD-4665-BF08-7A0C0A70D8D8@gmx.com> To: Daniele Pinna X-Mailer: Apple Mail (2.1510) X-Provags-ID: V03:K0:/ZabFh+n39582WQLCDbu7wty47zHLtVnVi94ZYejCKkA1Af4xIB 2srNeFdmGqEa7MuDqJuyTrn4Z7j6NCoGOx6CVU3bgu1kSRExzuEpEf1lS6nzipeyEVCQlhl B2Wo0BzjrkyYerpwHyXqyT3aNLvEmQEaT3jXza/WfVkzAHP2ba725MywWSW704+3vSGYBNG wBuKqPKQA9QpC+ZV8bAcw== X-UI-Out-Filterresults: notjunk:1;V01:K0:GyaF/VlvWj8=:yDzYf1TYampC1icUXow7AK mivz2RGMqOGvCeTK0ydckO81lYatkz+iG3UsDN/rueJNig+r4oNSmP97xaI6CB3YlSI4WDik0 rxN8Oumx+FKckT8vieJtsfBamopiF0jqbs4IvgKA5D1i40ftyAnbrwY5MGlzOFJO4damF2Cmb Lex9hqesScW+Pwx01P5fTBTkFBCXS3gD44is11cXpwbdq6mETSYsLjawgMSxpIO2ZD1fHgy94 h8751xmKyaEsUDbQT3MewvwNRi5dlDtAN6k68mbuP16qOzD8X6K2Tff75bfxrD/0YsW7jNfju gjDhN29VMxkhLaRcZduzZ/julvcuMU45oicMHhEISYSgWB9Xl5Y8tJVC6a1YaIYOSFTSnM3L4 jdG1AvqIrgDD2SHx5OyJaYIwO5zOXW1uXw2EF0ngorzfMwiTaYoxyRDnCTXVaeOXHa0RimAUa sRkHNvgISEPfVkZpDOQdEu4oTwMP3TgQdNauspQF/YDkRWdrPuH/mrXvwL4JnGMl7KVgB8cFY XMAO9d4LdZYmvxbhM0rnTsCdYGMbka6MP691tuiuS0ZDfBIbUB1uxJUrpsJS1d8Hs795ascEy F7UqdF7vgBQuqiuQCSb3zkKlq2hwBQeGKrI6x9OQLsdFi8UFXrDyN5jKjDMGd9+AZZ87dUZ3Z Ux8fpnlVpZ+MtHjsYFkj4D+w4wCvS9zLQAlJCRH0xJNb/E6hPTKw+5wMcPFqRdDN5/fZIq8tM XEDrjQYsft0bd4vjX/3If4svfIXuBM7nZqnGTw== X-Spam-Status: No, score=-2.6 required=5.0 tests=BAYES_00,FREEMAIL_FROM, HTML_MESSAGE,RCVD_IN_DNSWL_LOW autolearn=ham version=3.3.1 X-Spam-Checker-Version: SpamAssassin 3.3.1 (2010-03-16) on smtp1.linux-foundation.org Cc: bitcoin-dev@lists.linuxfoundation.org Subject: Re: [bitcoin-dev] "A Transaction Fee Market Exists Without a Block Size Limit"--new research paper suggests X-BeenThere: bitcoin-dev@lists.linuxfoundation.org X-Mailman-Version: 2.1.12 Precedence: list List-Id: Bitcoin Development Discussion List-Unsubscribe: , List-Archive: List-Post: List-Help: List-Subscribe: , X-List-Received-Date: Sun, 30 Aug 2015 20:09:02 -0000 --Apple-Mail=_A626710B-3D53-4A85-A348-EDDCB866C4AA Content-Transfer-Encoding: quoted-printable Content-Type: text/plain; charset=us-ascii Hi Daniele, I don't think there is any contention over the idea that miners that = control a larger percentage of the hash rate, h / H, have a = profitability advantage if you hold all the other variables of the = miner's profit equation constant. I think this is important: it is a = centralizing factor similar to other economies of scale. =20 However, that is outside the scope of the result that an individual = miner's profit per block is always maximized at a finite block size Q* = if Shannon Entropy about each transaction is communicated during the = block solution announcement. This result is important because it = explains how a minimum fee density exists and it shows how miners cannot = create enormous spam blocks for "no cost," for example. =20 Best regards, Peter > 2) Whether it's truly possible for a miner's marginal profit per unit = of hash to decrease with increasing hashrate in some parametric = regime.This however directly contradicts the assumption that an optimal = hashrate exists beyond which the revenue per unit of hash v' < v if h' = > h.=20 > Q.E.D=20 >=20 > This theorem in turn implies the following corollary: >=20 > COROLLARY: The marginal profit curve is a monotonically increasing of = miner hashrate. >=20 > This simple theorem, suggested implicitly by Gmaxwell disproves any = and all conclusions of my work. Most importantly, centralization = pressures will always be present.=20 --Apple-Mail=_A626710B-3D53-4A85-A348-EDDCB866C4AA Content-Transfer-Encoding: quoted-printable Content-Type: text/html; charset=us-ascii Hi = Daniele,

I don't think there is any contention over = the idea that miners that control a larger percentage of the hash rate, = h / H, have a profitability advantage if you hold all the = other variables of the miner's profit equation constant.  I think = this is important: it is a centralizing factor similar to other = economies of scale.  

However, that is = outside the scope of the result that an individual miner's profit per = block is always maximized at a finite block size Q* if Shannon Entropy = about each transaction is communicated during the block solution = announcement.  This result is important because it explains how a = minimum fee density exists and it shows how miners cannot create = enormous spam blocks for "no cost," for example. =  

Best = regards,
Peter


2) Whether it's truly possible for a miner's = marginal profit per unit of hash to decrease with increasing hashrate in = some parametric regime.This however directly contradicts the = assumption that an optimal hashrate exists beyond which the revenue per = unit of hash v' < v if  h' > = h. 

This theorem in turn implies the following = corollary:

COROLLARY: The marginal profit curve = is a monotonically increasing of miner hashrate.

This simple theorem, = suggested implicitly by Gmaxwell disproves any and all conclusions of my = work. Most importantly, centralization pressures will always be = present. 

= --Apple-Mail=_A626710B-3D53-4A85-A348-EDDCB866C4AA--