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From: Anthony Towns <aj@erisian.com.au>
To: Gavin Andresen <gavinandresen@gmail.com>,
	bitcoin-dev@lists.linuxfoundation.org
Subject: Re: [bitcoin-dev] Block size following technological growth
Date: Mon, 3 Aug 2015 08:35:45 +1000	[thread overview]
Message-ID: <20150802223545.GA14286@navy> (raw)
In-Reply-To: <CABsx9T1NqBX9Tr8vRCtCeri76e0wrtkvRhEPyG9Advv_3Uqxng@mail.gmail.com>

On Thu, Jul 30, 2015 at 12:20:30PM -0400, Gavin Andresen wrote:
> On Thu, Jul 30, 2015 at 10:25 AM, Pieter Wuille via bitcoin-dev
> > Some things are not included yet, such as a testnet whose size runs ahead
> > of the main chain, and the inclusion of Gavin's more accurate sigop
> > checking after the hard fork.
> First, THANK YOU for making a concrete proposal!
> So we'd get to 2MB blocks in the year 2021. I think that is much too
> conservative, and the most likely effect of being that conservative is that
> the main blockchain becomes a settlement network, affordable only for
> large-value transactions.

I haven't seen anyone do the (trivial) maths on this. Have I just
missed it? By my count:

 - blocks in 25 btc in rewards and about 0.5 btc in fees per block
 - at ~$300 USD per btc, that's ~$7,650 per block

 - current hashrate is ~400 PH/s; so ~240,000 PH/block works out
   to having to spend about 30PH per dollar earnt.
 - for comparison,
      https://products.butterflylabs.com/cloud-mining-contracts.html
    quotes $1.99 per GH/s for 12 months, which by my count is
      60*60*24*365 / 1.99 GH/$ = 15.8 PH per dollar spent
 - hashrate growth has slowed from about x4/quarter to x2/year:
     sep '13: ~1PH/s
     dec '13: ~4PH/s
     mar '14: ~20PH/s
     jun '14: ~80PH/s
     sep '14: ~200PH/s
     aug '15: ~400PH/s

 - so, as far as I understand it, miners don't make absurd profits compared
   to capital investment and running costs
 - presumably, then, miners will stop mining bitcoin if the revenue/block
   drops significantly at some point
 - less miners means a lower hashrate; a lower hashrate makes
   50% attacks easier, and that's a bad thing (especially if there's lots
   of pre-loved ASIC mining hardware available cheap on ebay or alibaba)

 - in about a year, the block reward halves, cutting out 12.5 btc or
   ~$3750 USD per block. without an increase in fees per block, miners
   will just get ~$3900 USD per block
 - the last time the reward for mining a block was under $4000 per block
   was around oct '13, with a hashrate of ~2PH/s

 - 13 btc in fees per block compared to .5 btc in fees per block is a
   25x increase; which could be either an increase in fee/txn or
   txns/block
 - with ~500 bytes/transaction, that's ~2000 transactions per MB
 - 13 btc in fees ($3900) per block means per transaction fees of
   about
     $2 for 1MB blocks
     $1 for 2MB blocks
     25c for 8MB blocks
     10c for 20MB blocks
   (assuming full blocks, 500 byte txns)

 - comparing that to credit card or paypal fees at ~2.5% that's:
    $2 -> minimum transaction  $80
    $1 -> minimum transaction  $40
    25c -> minimum transaction $10
    10c -> minimum transaction  $4

 - those numbers only depend on the USD/BTC exchange rate in so far as
   the more USD for a BTC, the more likely the block reward will pay
   for hashrate without transaction fees, even with the reward reduced
   to 12.5 btc/block. otherwise it's just USD/txn paying for USD/hashrate

 - the reference implementation fee of 0.1mBTC/kB equates to about
   3c per transaction (since it rounds up). Even 10c/transaction is more
   than a 3x increase on that.

What the above says to me is that even assuming everyone starts paying
fees, the lightning network works great, and so do sidechains and whatever
else, you /still/ want to up the volume of bitcoin txns by something like
an order of magnitude above what's currently allowed within a year or so.

Cheers,
aj



  parent reply	other threads:[~2015-08-02 22:35 UTC|newest]

Thread overview: 111+ messages / expand[flat|nested]  mbox.gz  Atom feed  top
2015-07-30 14:25 [bitcoin-dev] Block size following technological growth Pieter Wuille
2015-07-30 15:04 ` Greg Sanders
2015-07-30 15:12 ` Jorge Timón
2015-07-30 16:23   ` Jameson Lopp
2015-07-30 16:36     ` Bryan Bishop
2015-07-30 16:43       ` Jameson Lopp
2015-07-30 16:36   ` Venzen Khaosan
2015-07-30 17:51     ` Jorge Timón
2015-07-30 18:00       ` Jorge Timón
2015-07-30 16:56   ` Gary Mulder
2015-07-30 17:13     ` Mark Friedenbach
2015-07-30 16:20 ` Gavin Andresen
2015-07-30 16:41   ` Suhas Daftuar
2015-07-30 16:48   ` Adam Back
2015-07-30 16:49   ` Pieter Wuille
2015-07-31 10:16     ` Mike Hearn
2015-07-31 11:43       ` Venzen Khaosan
2015-07-31 11:51       ` Jorge Timón
2015-07-31 12:15         ` Mike Hearn
2015-07-31 13:07           ` Marcel Jamin
2015-07-31 14:33           ` Jorge Timón
2015-07-31 14:58             ` Mike Hearn
2015-07-31 15:28               ` Venzen Khaosan
2015-07-31 20:09               ` Elliot Olds
2015-08-04 10:35               ` Jorge Timón
2015-08-04 11:04                 ` Hector Chu
2015-08-04 11:27                   ` Pieter Wuille
2015-08-04 11:34                     ` Hector Chu
2015-08-04 12:10                       ` Venzen Khaosan
2015-08-04 13:13                       ` Jorge Timón
2015-08-04 13:28                         ` Hector Chu
2015-08-04 13:42                           ` Venzen Khaosan
2015-08-04 17:59                           ` Jorge Timón
2015-08-04 13:12                     ` Gavin Andresen
2015-08-04 13:54                       ` Pieter Wuille
2015-08-04 14:30                       ` Venzen Khaosan
2015-08-04 14:43                         ` [bitcoin-dev] Fwd: " Venzen Khaosan
2015-08-04 14:45                       ` [bitcoin-dev] " Alex Morcos
2015-08-05  8:14                       ` Gareth Williams
2015-08-04 11:59                   ` Jorge Timón
2015-08-04 12:19                     ` Hector Chu
2015-08-04 13:34                       ` Venzen Khaosan
2015-08-04 13:37                       ` Jorge Timón
2015-08-05  7:29                     ` Elliot Olds
2015-08-06  1:26                       ` Jorge Timón
2015-08-06 13:40                         ` Gavin Andresen
2015-08-06 14:06                           ` Pieter Wuille
2015-08-06 14:21                             ` Gavin Andresen
2015-08-06 14:53                               ` Pieter Wuille
     [not found]                                 ` <CABsx9T0B2bZrFHxYR_QNwBmxskQx31zt=QE5BJAYjcOo7wbo3A@mail.gmail.com>
2015-08-06 15:24                                   ` [bitcoin-dev] Fwd: " Gavin Andresen
2015-08-06 15:26                                     ` Pieter Wuille
2015-08-06 18:43                                       ` Michael Naber
2015-08-06 18:52                                         ` Pieter Wuille
2015-08-07 16:06                                           ` Thomas Zander
2015-08-07 16:30                                             ` Pieter Wuille
2015-08-07 17:00                                               ` Thomas Zander
2015-08-07 17:09                                                 ` Pieter Wuille
2015-08-07 21:35                                                   ` Thomas Zander
2015-08-07 22:53                                                     ` Adam Back
2015-08-08 16:54                                                       ` Dave Scotese
2015-08-07 17:50                                               ` Gavin Andresen
2015-08-07 18:05                                                 ` Jameson Lopp
2015-08-07 18:10                                                 ` Pieter Wuille
2015-08-07 21:43                                                   ` Thomas Zander
2015-08-07 22:00                                                   ` Thomas Zander
2015-08-06 16:19                                 ` [bitcoin-dev] " Tom Harding
2015-08-06 21:56                               ` Peter Todd
2015-08-06 15:25                           ` Jorge Timón
2015-08-06 16:03                             ` Gavin Andresen
2015-08-06 16:11                               ` Mike Hearn
2015-08-06 17:15                               ` Jorge Timón
2015-08-06 19:42                                 ` Gavin Andresen
2015-08-06 20:01                                   ` Pieter Wuille
2015-08-06 21:51                                   ` Jorge Timón
2015-08-06 23:09                         ` Elliot Olds
2015-08-10 19:28                           ` Jorge Timón
2015-08-11  5:48                             ` Elliot Olds
2015-08-09 18:46                   ` [bitcoin-dev] What Lightning Is Tom Harding
2015-08-09 18:54                     ` Mark Friedenbach
2015-08-09 20:14                       ` Hector Chu
     [not found]                         ` <CAOG=w-s9KsaPwveSpgdvsVTWUDV77YY7Em7NZGyxSQMMCccYSg@mail.gmail.com>
2015-08-09 20:48                           ` Hector Chu
2015-08-10  4:48                             ` Joseph Poon
2015-08-10 17:03                         ` odinn
2015-08-10 17:14                           ` Pieter Wuille
2015-08-10 17:45                             ` odinn
2015-08-09 21:27                       ` Tom Harding
2015-08-09 21:40                         ` Chris Pacia
2015-08-09 21:45                         ` Hector Chu
2015-08-09 21:57                           ` Patrick Strateman
2015-08-09 22:03                             ` Hector Chu
2015-08-09 22:36                               ` Patrick Strateman
2015-08-10  1:52                           ` Tom Harding
2015-08-10  3:31                             ` Patrick Strateman
2015-08-09 22:06                         ` Patrick Strateman
2015-08-09 22:09                           ` Hector Chu
2015-08-09 22:27                             ` Patrick Strateman
2015-08-09 22:30                               ` Hector Chu
2015-08-09 22:44                             ` Gavin Andresen
2015-08-09 22:51                               ` Btc Drak
2015-08-10  8:27                                 ` Thomas Zander
2015-08-10  8:36                                   ` Patrick Strateman
2015-08-10  4:39                               ` Joseph Poon
2015-08-10 21:02                               ` Anthony Towns
2015-08-10 21:19                                 ` Anthony Towns
2015-08-10 21:43                                   ` Adam Back
2015-08-11  9:01                                     ` Hector Chu
2015-08-11 17:17                                       ` Simon Liu
2015-07-31 14:52           ` [bitcoin-dev] Block size following technological growth Bryan Bishop
2015-07-30 17:46   ` Jorge Timón
2015-08-02 22:35   ` Anthony Towns [this message]
2015-07-30 20:20 ` Thomas Zander

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