Quote from: Gavin Andresen on February 19, 2013, 03:17:17 PM

If you think that the block size should stay at 1 megabyte forever, then you're saying the network will never support more than 7 transactions per second, and each transaction will need to be for a fairly large number of bitcoins (otherwise transaction fees will eat up the value of the transaction).

If transactions are all pretty big, why the heck do we have 8 decimal places for the transaction amount?

Why not? They're 64-bit numbers, might as well give plenty of room for whatever the price turns out to be.

More to the point, if I'm correct and in the future we're paying miners billions of dollars a year, that implies Bitcoin is probably transfering trillions of dollars a year in value, on and off chain. In that scenario the market cap is probably tens of trillions of dollars worth, so 1BTC could easily be worth something like $10,000USD. Thus the $20 fee is 0.002BTC. That's pretty close to fees currently in terms of BTC - you might as well ask why do we have 8 decimal places now?

Quote from: Gavin Andresen on February 19, 2013, 03:17:17 PM

One reasonable concern is that if there is no "block size pressure" transaction fees will not be high enough to pay for sufficient mining.

Here's an idea: Reject blocks larger than 1 megabyte that do not include a total reward (subsidy+fees) of at least 50 BTC per megabyte.

"But miners can just include a never broadcast, fee-only transactions to jack up the fees in the block!"

Yes... but if their block gets orphaned then they'll lose those "fake fees" to another miner. I would guess that the incentive to try to push low-bandwidth/CPU miners out of the network would be overwhelmed by the disincentive of losing lots of BTC if you got orphaned.

You know, it's not a crazy idea, but trying to figure out what's the right BTC value is a tough, tough problem, and changing it later if it turns out your estimates of what the BTC/USD/mining hardware conversions as well as the orphan rate is a tough problem. You'll also create a lot of incentives for miners to create systems to crawl through the whole Bitcoin network, discovering every single node, and then use that knowledge to connect to every node at once. Using such a system the second you find your block, you'll immediately broadcast it to every node immediately. Of course, the biggest miner who actually succeeds in doing this will have the lowest orphan rate, and thus has much more room to increase block sizes because faking tx fee's costs them a lot less than miners who haven't spent so much effort. (effort that like all this stuff diverts resources from what really keeps the network secure, hashing power)

This same system can also now be used to launch sybil attacks on the network. You could use it to launch double-spend attacks, or to monitor exactly where every transaction is coming from. Obviously this can be done already - blockchain.info already has such a network - but the last thing we need is to give incentives to build these systems. As it is we should be doing more to ensure that each peer nodes connect to comes from a unique source run by an independent entity like using P2Pool PoW's linked to IP addresses.