Bitcoin Network Capacity Analysis – Part 1: Macro Block Trends
tradeblock.com
tradeblock.com
Here is a good podcast episode with opinions representing both sides (Gavin Andresen and Peter Todd):
https://letstalkbitcoin.com/blog/post/lets-talk-bitcoin-217-...
- The risk of making orphan blocks. A larger block may take slightly longer to propagate across the network, and that slightly increases the chance that another miner will generate a valid block during that delay and propagate it faster. When that happens, the first miner misses out on the block reward and fees, about $5500 today
- A miner could put no transactions in a block, and still get the 25 bitcoin block reward, but if they do that, they are hurting confidence in the bitcoin network, and devaluing their investment into hardware and skills and the value of bitcoins they own. If you drag the chart left to see the history at https://tradeblock.com/blockchain then you may see some miners who put zero transactions in a block or very few transactions, but it is not so common
Orphan blocks are an important issue in the debate about block size increases which the article linked to is discussing. Increasing the block size is likely to increase the rate of orphaned blocks, though there are proposals that might mitigate that risk.
The ratio of fees to block reward is likely to change in future, influenced by many factors including block size, and there are many competing theories about what will happen as that ratio changes, which run the gamut from doom to success. The block reward is automatically cut in half every 4 years, and the long term plan for bitcoin seems to be based on the fees increasing in value to eventually replace the block reward
Arguing a little with my own post, with this quote from a Bitcoin developer: "There is no guarantee that future one-gigabyte blocks full of smaller transactions will generate enough fees to secure the blockchain...." https://blog.bitcoinfoundation.org/blocksize-economics/
I don't think that's true at all. Even if some would not clear any transactions people would still be okay with that for as long as the rest does. And there are definitely some zero transaction blocks being minted.
Yes, there definitely are. As I said, if you read my comment.
It's like asking why you don't litter when doing so would save you the few moments it takes to put something in the trash. The health of the system is more important to many than extracting a few cents more in fees.
If blocks fill up, transactions with higher fees get through first. So the free market will solve this problem when necessary. It's in the interest of miners that fees go up, and the big miners control the block size, so a block size increase is unlikely.
Bitcoin's block reward halves next year, which instantly halves mining income. Bitcoin was designed so that when it became large enough, fees would support mining. Next year, fees become more important, and pressure for higher fees will increase. The system is functioning as designed.
[1] https://blockchain.info/charts/estimated-transaction-volume-...
This means that if the country of Greece (11m) were to use Bitcoin, each person would only be able to make 1 transactions every 48 days.
That's also assuming no competition with the fees. The "Free Market" design that prioritizes blocks with larger fees would mean that some blocks stay in the queue for much longer than 48 days. Just for the country of Greece.
[1] https://bitcointalk.org/index.php?topic=941331.msg10360199#m...
The offshore miners control Bitcoin, and they are independently and rationally aligned with their own self-interest and profit (as they should be). When it comes to forking changes that are not directly beneficial to the miners (block size), it's nearly impossible to get a consensus, even if it means making Bitcoin a better currency.
When you consider a change that makes it more difficult for a miner or cuts into a miner's profits, like increasing the supply to counteract deflation and hoarding, then you start to realize why Bitcoin is still having these issues.
The most important thing that refutes any notion of "miners control the network" is that, if some miners adopt a ruleset unfavourable to users, users will simply stop accepting whatever that miner is mining as Bitcoins, and their profits will go to zero (because they're mining some Bitcoin-Like but not really Bitcoin currency). If users start using a different ruleset than miners, the miners have to switch over or they will have no one to sell their coins to.
To say that the entire bitcoin userbase will band together to form a concensus to avoid miners is to turn the same blind eye to rational human behavior and tragedy of the commons. It's just as much wishful thinking and hand waving as thinking the miners will act solely out of benevolence for Bitcoin.
You just described off-chain transactions which aren't considered Bitcoin, and if anything are only a temporary fix to the block-size problem.
Tragedy of the commons exists because any of the solutions to a number of problems in the Bitcoin implementation need to be directly profitable for the miners in order to happen. For block-size and supply, they are the opposite of profitable for the miners.
It actually doesn't necessarily require a 51% consensus to change the rules. That's just a nice tradition the devs follow. Users are free to change the rules and ignore miners that continue to use the old rules. Waiting for consensus just ensures that there will be a minimal loss of mining power.
Users transmit transactions to the network, where miners put them into blocks, generate hashes, and add them to the chain. Nodes always trust the longest chains as being correct. Miners control the blocks, not users.
This isn't some Starbucks or Target where a centralized policy maker is deciding what to do based on "user demand", assuming users were even able to collude.
Consider this; if a miner were to change their code to mine 100 Bitcoin per block instead of 25, would people trust them just because they represent the longest chain? Obviously not.
A node will accept a block if it's in the longest chain AND it follows the node's ruleset.