Return-Path: Received: from smtp1.linuxfoundation.org (smtp1.linux-foundation.org [172.17.192.35]) by mail.linuxfoundation.org (Postfix) with ESMTPS id 738809A for ; Wed, 5 Aug 2015 08:33:14 +0000 (UTC) X-Greylist: whitelisted by SQLgrey-1.7.6 Received: from mail-ob0-f172.google.com (mail-ob0-f172.google.com [209.85.214.172]) by smtp1.linuxfoundation.org (Postfix) with ESMTPS id A24DE10E for ; Wed, 5 Aug 2015 08:33:13 +0000 (UTC) Received: by obdeg2 with SMTP id eg2so26427512obd.0 for ; Wed, 05 Aug 2015 01:33:13 -0700 (PDT) DKIM-Signature: v=1; a=rsa-sha256; c=relaxed/relaxed; d=gmail.com; s=20120113; h=mime-version:in-reply-to:references:date:message-id:subject:from:to :cc:content-type; bh=w47m/ZXocOSR+SkzAX5YQA1fz3E7jR96Zv+tSzC2r7k=; b=cM+JeqgxsdVtLHC0glTejrTrLRWPBhMaCQbkEeta8UoKXIsei3WQLuwBS0p5AdTn2/ Sj3ZD2vCiwUmklscdg4TdByN5nFwEI9QpVVaUZh0lMP4M9cc+TfHPvDM0W19jV43Rwy7 m961gV/8IqxfGpjDxXRzltddu5aoqLGcrGnN38n8b+tFqfD1e0NCcF3w56PDfAkrtl3K rGfXCo4MLTOm+gTRbjradEFWO/qAl6QmZwGOQnEx1F0aoal8+0QSOesLKfypW56LuaAb eH8bSSUolPq2+C4fI40AOSFhz7W68P5ko1nYi9Kw4zR9hPnqRUlTOK9BqjnxDwcnsppB PjIQ== MIME-Version: 1.0 X-Received: by 10.60.178.33 with SMTP id cv1mr7020174oec.11.1438763593083; Wed, 05 Aug 2015 01:33:13 -0700 (PDT) Received: by 10.202.224.212 with HTTP; Wed, 5 Aug 2015 01:33:13 -0700 (PDT) In-Reply-To: References: <1438640036.2828.0.camel@auspira.com> Date: Wed, 5 Aug 2015 10:33:13 +0200 Message-ID: From: Benjamin To: Peter R Content-Type: multipart/alternative; boundary=089e01182252e1b4cf051c8c4025 X-Spam-Status: No, score=-2.7 required=5.0 tests=BAYES_00,DKIM_SIGNED, DKIM_VALID,DKIM_VALID_AU,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 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: Wed, 05 Aug 2015 08:33:14 -0000 --089e01182252e1b4cf051c8c4025 Content-Type: text/plain; charset=UTF-8 Content-Transfer-Encoding: quoted-printable Very interesting paper. When you talk about a market, what are you referring to exactly? A market means that demand and supply are matched continuously, and Bitcoin has no such mechanism. A lot of discussion has been around fixing the "supply" of blocksize. A floating number would mean that a hardcoded number or function would be replaced by a decision process involving users (demand). I don't think a fee market exists and that demand or supply are not easily definable. Ideally supply of transaction capability would completely depend on demand, and a price would exist such that demand can react to longterm or shorterm supply constraints. In such a scenario there would be no scalability concerns, as scale would be almost perfectly elastic. On Tue, Aug 4, 2015 at 8:40 AM, Peter R via bitcoin-dev < bitcoin-dev@lists.linuxfoundation.org> wrote: > Dear Bitcoin-Dev Mailing list, > > I=E2=80=99d like to share a research paper I=E2=80=99ve recently complete= d titled =E2=80=9CA > Transaction Fee Market Exists Without a Block Size Limit.=E2=80=9D In ad= dition to > presenting some useful charts such as the cost to produce large spam > blocks, I think the paper convincingly demonstrates that, due to the > orphaning cost, a block size limit is not necessary to ensure a functioni= ng > fee market. > > The paper does not argue that a block size limit is unnecessary in > general, and in fact brings up questions related to mining cartels and th= e > size of the UTXO set. > > It can be downloaded in PDF format here: > > https://dl.dropboxusercontent.com/u/43331625/feemarket.pdf > > Or viewed with a web-browser here: > > > https://www.scribd.com/doc/273443462/A-Transaction-Fee-Market-Exists-With= out-a-Block-Size-Limit > > *Abstract. *This paper shows how a rational Bitcoin miner should select > transactions from his node=E2=80=99s mempool, when creating a new block, = in order > to maximize his profit in the absence of a block size limit. To show this= , > the paper introduces the block space supply curve and the mempool demand > curve. The former describes the cost for a miner to supply block space b= y > accounting for orphaning risk. The latter represents the fees offered by > the transactions in mempool, and is expressed versus the minimum block si= ze > required to claim a given portion of the fees. The paper explains how th= e > supply and demand curves from classical economics are related to the > derivatives of these two curves, and proves that producing the quantity o= f > block space indicated by their intersection point maximizes the miner=E2= =80=99s > profit. The paper then shows that an unhealthy fee market=E2=80=94where = miners are > incentivized to produce arbitrarily large blocks=E2=80=94cannot exist sin= ce it > requires communicating information at an arbitrarily fast rate. The pape= r > concludes by considering the conditions under which a rational miner woul= d > produce big, small or empty blocks, and by estimating the cost of a spam > attack. > > Best regards, > Peter > > _______________________________________________ > bitcoin-dev mailing list > bitcoin-dev@lists.linuxfoundation.org > https://lists.linuxfoundation.org/mailman/listinfo/bitcoin-dev > > --089e01182252e1b4cf051c8c4025 Content-Type: text/html; charset=UTF-8 Content-Transfer-Encoding: quoted-printable
Very interesting paper. When you talk about a market, what= are you referring to exactly? A market means that demand and supply are ma= tched continuously, and Bitcoin has no such mechanism. A lot of discussion = has been around fixing the "supply" of blocksize. A floating numb= er would mean that a hardcoded number or function would be replaced by a de= cision process involving users (demand). I don't think a fee market exi= sts and that demand or supply are not easily definable. Ideally supply of t= ransaction capability would completely depend on demand, and a price would = exist such that demand can react to longterm or shorterm supply constraints= . In such a scenario there would be no scalability concerns, as scale would= be almost perfectly elastic.

On Tue, Aug 4, 2015 at 8:40 AM, Peter R via bitcoin-dev <= span dir=3D"ltr"><bitcoin-dev@lists.linuxfoundation.org> w= rote:
Dear Bitcoin-Dev Mailing list,

I=E2=80=99d l= ike to share a research paper I=E2=80=99ve recently completed titled =E2=80= =9CA Transaction Fee Market Exists Without a Block Size Limit.=E2=80=9D =C2= =A0In addition to presenting some useful charts such as the cost to produce= large spam blocks, I think the paper convincingly demonstrates that, due t= o the orphaning cost, a block size limit is not necessary to ensure a funct= ioning fee market. =C2=A0

The paper does not argue= that a block size limit is unnecessary in general, and in fact brings up q= uestions related to mining cartels and the size of the UTXO set. =C2=A0=C2= =A0

It can be downloaded in PDF format here:
=


Or viewed with a web-browser= here:


Abstract. =C2= =A0This paper shows how a rational Bitcoin miner should select transact= ions from his node=E2=80=99s mempool, when creating a new block, in order t= o maximize his profit in the absence of a block size limit. To show this, t= he paper introduces the block space supply curve and the mempool demand cur= ve.=C2=A0 The former describes the cost for a miner to supply block space b= y accounting for orphaning risk.=C2=A0 The latter represents the fees offer= ed by the transactions in mempool, and is expressed versus the minimum bloc= k size required to claim a given portion of the fees.=C2=A0 The paper expla= ins how the supply and demand curves from classical economics are related t= o the derivatives of these two curves, and proves that producing the quanti= ty of block space indicated by their intersection point maximizes the miner= =E2=80=99s profit.=C2=A0 The paper then shows that an unhealthy fee market= =E2=80=94where miners are incentivized to produce arbitrarily large blocks= =E2=80=94cannot exist since it requires communicating information at an arb= itrarily fast rate.=C2=A0 The paper concludes by considering the conditions= under which a rational miner would produce big, small or empty blocks, and= by estimating the cost of a spam attack. =C2=A0

B= est regards,
Peter

_______________________________= ________________
bitcoin-dev mailing list
bitcoin-dev@lists.= linuxfoundation.org
https://lists.linuxfoundation.org/mail= man/listinfo/bitcoin-dev


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