Message-ID: <55833F87.3090408@thinlink.com>
Date: Thu, 18 Jun 2015 15:00:39 -0700
From: Tom Harding <tomh@thinlink.com>
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To: Pieter Wuille <pieter.wuille@gmail.com>
References: <CAPg+sBi5fYHGLv4wtWbWE7jov8CX=q9UX=vhxDVepG6JfX30+g@mail.gmail.com>
	<557DBDCC.5040106@student.ethz.ch>
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Cc: bitcoin-development@lists.sourceforge.net
Subject: Re: [Bitcoin-development] Mining centralization pressure from
 non-uniform propagation speed
Precedence: list

On 06/12/2015 06:51 PM, Pieter Wuille wrote:
>> However, it does very clearly show the effects of
>> larger blocks on centralization pressure of the system.

On 6/14/2015 10:45 AM, Jonas Nick wrote:
> This means that your scenario is not the result of a cartel but the result of a long-term network partition.
>

Pieter, to Jonas' point, in your scenario the big miners are all part of 
the majority partition, so "centralization pressure" (pressure to merge 
with a big miner) cannot be separated from "pressure to be connected to 
the majority partition".

I ran your simulation with a large (20%) miner in a 20% minority 
partition, and 16 small (5%) miners in a majority 80% partition, well 
connected.  The starting point was your recent update, which had a more 
realistic "slow link" speed of 100 Mbit/s (making all of the effects 
smaller).

To summarize the results across both your run and mine:

** Making small blocks when others are making big ones -> BAD
** As above, and fees are enormous -> VERY BAD

** Being separated by a slow link from majority hash power -> BAD

** Being a small miner with blocksize=20MB -> *NOT BAD*


Configuration:
   * Miner group 0: 20.000000% hashrate, blocksize 20000000.000000
   * Miner group 1: 80.000000% hashrate, blocksize 1000000.000000
   * Expected average block size: 4800000.000000
   * Average fee per block: 0.250000
   * Fee per byte: 0.0000000521
Result:
   * Miner group 0: 20.404704% income (factor 1.020235 with hashrate)
   * Miner group 1: 79.595296% income (factor 0.994941 with hashrate)

Configuration:
   * Miner group 0: 20.000000% hashrate, blocksize 20000000.000000
   * Miner group 1: 80.000000% hashrate, blocksize 20000000.000000
   * Expected average block size: 20000000.000000
   * Average fee per block: 0.250000
   * Fee per byte: 0.0000000125
Result:
   * Miner group 0: 19.864232% income (factor 0.993212 with hashrate)
   * Miner group 1: 80.135768% income (factor 1.001697 with hashrate)

Configuration:
   * Miner group 0: 20.000000% hashrate, blocksize 20000000.000000
   * Miner group 1: 80.000000% hashrate, blocksize 1000000.000000
   * Expected average block size: 4800000.000000
   * Average fee per block: 25.000000
   * Fee per byte: 0.0000052083
Result:
   * Miner group 0: 51.316895% income (factor 2.565845 with hashrate)
   * Miner group 1: 48.683105% income (factor 0.608539 with hashrate)

Configuration:
   * Miner group 0: 20.000000% hashrate, blocksize 20000000.000000
   * Miner group 1: 80.000000% hashrate, blocksize 20000000.000000
   * Expected average block size: 20000000.000000
   * Average fee per block: 25.000000
   * Fee per byte: 0.0000012500
Result:
   * Miner group 0: 19.865943% income (factor 0.993297 with hashrate)
   * Miner group 1: 80.134057% income (factor 1.001676 with hashrate)