Re: [bitcoin-dev] BIP proposal: Increase block size limit to 2 megabytes

[Jonathan Toomim <j@toom.im>]

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On Feb 7, 2016, at 7:19 AM, Anthony Towns via bitcoin-dev <bitcoin-dev@lists.linuxfoundation.org> wrote:

> The stated reasoning for 75% versus 95% is "because it gives "veto power"
> to a single big solo miner or mining pool". But if a 20% miner wants to
> "veto" the upgrade, with a 75% threshold, they could instead simply use
> their hashpower to vote for an upgrade, but then not mine anything on
> the new chain. At that point there'd be as little as 55% mining the new
> 2MB chain with 45% of hashpower remaining on the old chain. That'd be 18
> minute blocks versus 22 minute blocks, which doesn't seem like much of
> a difference in practice, and at that point hashpower could plausibly
> end up switching almost entirely back to the original consensus rules
> prior to the grace period ending.


Keep in mind that within a single difficulty adjustment period, the difficulty of mining a block on either chain will be identical. Even if the value of a 1MB branch coin is $100 and the hashrate on the 1 MB branch is 100 PH/s, and the value of a 2 MB branch coin is $101 and the hashrate on the 2 MB branch is 1000 PH/s, the rational thing for a miner to do (for the first adjustment period) is to mine on the 2 MB branch, because the miner would earn 1% more on that branch.

So you're assuming that 25% of the hashrate chooses to remain on the minority version during the grace period, and that 20% chooses to switch back to the minority side. The fork happens. One branch has 1 MB blocks every 22 minutes, and the other branch has 2 MB blocks every 18 minutes. The first branch cannot handle the pre-fork transaction volume, as it only has 45% of the capacity that it had pre-fork. The second one can, as it has 111% of the pre-fork capacity. This makes the 1 MB branch much less usable than the 2 MB branch, which in turn causes the market value of newly minted coins on that branch to fall, which in turn causes miners to switch to the more profitable 2MB branch. This exacerbates the usability difference, which exacerbates the price difference, etc. Having two competing chains with equal hashrate using the same PoW function and nearly equal features is not a stable state. Positive feedback loops exist to make the vast majority of the users and the hashrate join one side.

Basically, any miners who stick to the minority branch are going to lose a lot of money.

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