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From: Jeff Garzik <jgarzik@bitpay.com>
Date: Thu, 12 Feb 2015 10:27:53 -0500
Message-ID: <CAJHLa0PkzG44JpuQoHVLUU8SR55LaJf5AwG=a7AjK2u7TAveOQ@mail.gmail.com>
To: Mike Hearn <mike@plan99.net>
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Cc: Bitcoin Dev <bitcoin-development@lists.sourceforge.net>
Subject: Re: [Bitcoin-development] replace-by-fee v0.10.0rc4
Precedence: list

Repeating past statements, it is acknowledged that Peter's scorched
earth replace-by-fee proposal is aptly named, and would be widely
anti-social on the current network.

At a high level, we can see that this thread is contentious because
this covers _what we want bitcoin to be_, and that is an opinion
(versus engineering fact), and it varies from person to person.

However, hope is the denial of reality...instead we should walk
forward with our eyes open[1].  My interest in bitcoin originates from
the science fiction concept of "credits"[2], a universal money that
transcends national borders and even planets.  That is what I hoped
bitcoin would be.  "universal payments" is both a laudable goal and a
shopworn bitcoin marketing slogan.

The fundamental engineering truths diverge from that misty goal:
Bitcoin is a settlement system, by design.

The process of consensus "settles" upon a timeline of transactions,
and this process -- by design -- is necessarily far from instant.
Alt-coins that madly attempt 10-second block times etc. are simply a
vain attempt to paper over this fundamental design attribute:
consensus takes time.

As such, the blockchain can never support All The Transactions, even
if block size increases beyond 20MB.  Further layers are -- by design
-- necessary if we want to achieve the goal of a decentralized payment
network capable of supporting full global traffic.

Bitcoin payments are like IP packets -- one way, irreversible.  For
larger value transfers this attaches attendent risk of loss -- as
we've seen in the field time & again.  The world's citizens en masse
will not speak to each other with bitcoin (IP packets), but rather
with multiple layers (HTTP/TCP/IP) that enable safe and secure value
transfer or added features such as instant transactions.

This opinion is not a conspiracy to "put the bankers back in charge"
-- it is a simple acknowledgement of bitcoin's design.  The consensus
system settles on a timeline.

Bitcoin transactions are, by definition, not instant.
Zero confirmation transactions are, by definition, not secure.

Proposals such as Oleg's are _necessary_ to fully build out the
bitcoin system.  Avoid short-sighted, short-term thinking that views
the lowest layer (one-way value xfer) at the most optimal layer at
which free persons will transact freely & instantly across planet
Earth.

It is foolish to think the entire world will connect directly to the
P2P block network and broadcast all the morning coffees to all the
miners.  That's not how the system works.  It is a settlement layer.
We _must_ build decentralized layered solutions on top of bitcoin,
rather than stuffing everything into bitcoin itself.


[1] http://www.goodreads.com/quotes/35199-hope-is-the-denial-of-reality-it-is-the-carrot
[2] http://garzikrants.blogspot.com/2013/06/shadowrun-and-bitcoins-roots.html


On Thu, Feb 12, 2015 at 6:58 AM, Mike Hearn <mike@plan99.net> wrote:
> 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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-- 
Jeff Garzik
Bitcoin core developer and open source evangelist
BitPay, Inc.      https://bitpay.com/