Quote from: paraipan on March 23, 2013, 10:58:10 PM

why not enact a percentage fee, similar to what we have now with the banking system, on Bitcoin?

There's no certain way to determine which of the outputs are the part being spent versus what is being returned as change.

Quote from: Mike Hearn on March 23, 2013, 10:57:27 PM

An assurance contract, also known as a provision point mechanism, is a game theoretic mechanism and a financial technology that facilitates the voluntary creation of public goods and club goods in the face of the free rider problem.

The proposal is to replace variable transaction fees (there always needs to be a minimum fee, to prevent relay spam) by rewarding miners with assurance contract payouts? This sounds very interesting.

Should one of the goals of reward system be to make sure that the hash rate is never decreasing? What if the businesses that provide the bulk of the financing of assurance contracts go bankrupt? The network could experience a significant reduction in hash rate; Miners at the margin of profitability would take their hardware offline. All this offline hardware could flood the secondary market, driving the cost of the equipment down, and cause a "hardware deflationary spiral". Then the network could be vulnerable to attack. Once mining hardware is produced, it is always "out there" even if it isn't active. So idle equipment might considered a threat; Hence, no system should allow for hash rate to drop suddenly.

It seems that a system of assurance contracts would also be susceptible to hysteresis. You even gave an example of it, that merchants would start to notice double spends and bump up the total value of their contracts accordingly. Shouldn't any system of rewards err on the side of always having too much hashing power instead of sometimes having too little?

Liberating the block size limit (assuming no propagation issues) is appealing in the context of assurance contracts because the economic interests of miners are aligned with those who have the greatest need for security but it seems to be a fragile manual process that involves a lot of subjective measure.