Quote from: vokain on April 07, 2014, 04:48:44 AM

Quote from: AnonyMint on April 05, 2014, 03:01:50 PM

Another reason that transaction fees don't work.

Quote from: AnonyMint on November 23, 2013, 01:31:34 AM

I finally had a spare moment to contemplate the variables.

A key factor is the block size. If the block size is unlimited (and bandwidth is an insignificant cost), then unless miners have a monopoly they will accept transactions with fees as low as don't constitute a DoS attack, in order to maximize revenue.

In other words, they would have no pricing power at all (a Tragedy of the Commons) and the system would devolve into a partial-monopoly in order to gain pricing power.

A partial-monopoly in this case is enough % of the network hashrate to delay transactions (by that % of blocks) which do not include a sufficient fee.

If we limit block size, then the system doesn't scale.

If we let the Bitcoin foundation decide when to increase block size, then they control the economic market function, i.e. we've centralized Bitcoin.

Let us assume unlimited block size and partial-monopolies. Thus the transaction fee can always be forced higher in order to generate more revenue for the miners. Thus Bitcoin devolves (as coin rewards diminish) to a system that presents spenders with a choice between include a very high transaction fee or accept an ever increasing delay for confirmation. This will exacerbate as coin rewards diminish and volume of transactions increase.

If we instead assume limited block size, then the Bitcoin foundation will set the transaction fees, not the market.

Bitcoin is a broken design.

So, going from what you're saying, if the blocksize was unlimited as to increase bandwidth (as opposed to the artificially-imposed 1MB block-size limit), a reliable anti-trust mechanism/protocol would have to be in place to prevent collusion, nefarious or accidental.

I'm making the claim that the miners would be forced to collude else transaction fees would trend down until they equal miners' costs under competition, because there would be no limitation on slots per block for transactions to compete for.

Quote from: vokain on April 07, 2014, 04:48:44 AM

It seems to me that miners lack a check on their power, at least as of present in the current crop of cryptocurrencies. Currently, the only possible solution seems to be forking the chain, but without a fundamental anti-trust check, that does nothing to prevent future intra-blockchain monopolies and weakens stability.

Agreed but that is orthogonal to my point. My point is that transaction fees force either the miners to collude or the Bitcoin developers to control the network with block size to set a desirable transaction rate. The latter gives the Bitcoin developers too much power.

Transactions fees turn off the free market. I propose to fix it by saying an altcoin should make transaction fees 0, fund mining from perpetual new coins, and control transaction spam another way (which I know how to do).

Upthread I explained in great detail why perpetual debasement (new coins) is very desirable from every possible consideration. Goldbugs need to read my explanation so they can break out of their incorrect macroeconomic understanding.

Also I thought of another attack possible due to transactions fees (but most didn't agree and I believe they couldn't understand my point).

Quote from: vokain on April 07, 2014, 04:48:44 AM

So, how to check against the ability of mining monopolies to delay/reject transactions of their choosing:
if they're artificially raising the costs of transactions through monopoly power?
if they're targeting/censoring transactions by means of blacklists (for instance, MasterProtocol, Counter-Party, ColoredCoins)?

I know how to do this. Lips sealed

Cpu-only is one aspect, and the other is controlling the sizes of the pools.

Quote from: vokain on April 07, 2014, 04:48:44 AM

Does this mean that we have to scale the ability of small miners to be as relevant in proving a block as a monopoly is, am I thinking in the right direction here?

Yup, but we can't eliminate pools. Can you imagine a smaller miner earning a coin every 6 months (e.g. when the coin is worth $10,000). Instead the pool helps the small miner earn 1/180th of a coin every day.

We also need pools because it is the only way to control orphan rate and get sub-1 minute transaction speed. Also we need pools for another very important reason. Lips sealed

Quote from: vokain on April 07, 2014, 04:48:44 AM

It seems that solo miners in the Bitcoin mining scene though probably have just as good a chance of profiting if not better through lack of pool fees (tradeoff: variance increases the smaller the % a miner is of the total hashrate), consequently in a democratic setting, they have as much power as a minority does in any given democracy, which is almost none (though they may have voice).

We must have pools.

Quote from: vokain on April 07, 2014, 04:48:44 AM

Instead of the gamble for one entity to receive the one block reward which allocates disproportional power to leading pool operators, how can the nature of the block reward be changed to promote decentralized mining as opposed to the centralization that the current schema promotes?

Make transaction fees 0, fund from perpetual debasement, and contemplate a design to prevent pools from growing too large.