Quote from: Meni Rosenfeld on June 13, 2015, 06:36:09 PM

Quote from: chmod755 on June 13, 2015, 03:17:52 AM

Meni Rosenfeld: What do you think about the BIP 100 draft?

If I understand correctly, in this proposal the miners get the ultimate say about what the block limit will be. That is ill-advised, as their incentives are not aligned with those of the users and the nodes. A voting mechanism makes it very easy for miners to collude.

BIP 100 is the best available option
Jeffs BIP 100 suggestion is not perfect and Menis comments on it our partially true. Please see Menis comments here:
http://www.reddit.com/r/Bitcoin/comments/39qh66/i_would_like_more_discussion_about_this_objection/

Under BIP 100 miners will vote on the blocksize limit and it is true that miners interests are not perfectly aligned with users and therefore the limit may be sub optimal. The limit will however be able to dynamically increase with demand, but in a conservative manner, which should alleviate many peoples concerns that blocks will get too big. This proposal may result in blocks being too small, for the reasons Meni says, but this may be appropriate conservatism. No solution is going to be perfect, but we need to have some kind of limit policy. I think BIP 100 is the best suggestion so far, better than doing nothing, increasing the limit to 20MB or implementing an historic median based rule.

Median based rule versus BIP 100
The classic problem with the median based rule is that each individual miner may try to maximise short term profit by including more transactions in blocks. Therefore the limit is increases. As a whole the mining industry would prefer not to include that many transactions as they would rather reduce supply a bit and achieve higher fees. This is analogous to the tragedy of the commons problem. BIP 100 solves this, as miners collectively vote on the maximum blocksize, in order to maximise the USD value of fees. It is in the miners long term interests to see higher transaction volumes, a higher USD exchange rate and for Bitcoin to succeed. At the same time miners need to ensure the supply of space in blocks is sufficiency scarce to be able to maintain high enough fees. Miners will make a balanced decision, partially based on price elasticity of demand, which is ultimately driven by the users.

More Economics
This proposal allows miners to control the supply side of the market for transactions and users to control demand. This seems an appropriate balance to me. Unlike what may occur in other industries when cartels try to restrict supply, this vote will not enable the miners to implement barriers to entry. Any miner will always be free to join the industry at will, and vote for larger blocks, without a competitive disadvantage.

The economic value of mining transaction fee revenue is the core Bitcoin metric that should be maximised
Miners will vote to maximise the value of mining transaction fee revenue over the long to median term. People have different visions for what Bitcoin should be and would like to prioritise different metrics. Personally I think maximising mining transaction fee revenue is perhaps the most important long term metric measuring Bitcoins success. This measure reflects Bitcoins long term sustainable security. I challenge anyone to suggest an alternative single metric considered more indicative of success.

Improves Network security
BIP 100 is also a defence against any future SHA256 two way pegged Sidechain. Currently if one wants to use bitcoin is a zero trust environment, one needs to use the main Bitcoin Blockchain, this creates transaction demand that should eventually secure the network. If in the future a Sidechain begins to become successful, users could switch to this and miners could also begin to switch over. Eventually if the Sidechain has more revenue for miners, it could have a higher hashrate than the mainchain which could undermine the mainchain security. A Sidechain is more likely to achieve this if it implements policies which maximise mining revenue. I therefore propose that Bitcoin core implements policies to maximise mining revenue now, to secure it against this and other future attacks, which aim to incentivise miners more on another system. Sidechains may be inevitable anyway, and I am not against competition for the mainchain, I just think its in Bitcoins interests for the mainchain to be the most secure.

Therefore, at this point, I give my support to BIP 100.