As for "the ecosystem waiting around for laggards", yes, it is absolutely the ecosystems y responsibility to not take actions that will result in people losing money without providing them far more than enough opportunity to fix it. One of the absolute most important features of Bitcoin is that, if you're running a full node, you are provided reasonable security against accepting invalid transactions.

On December 16, 2015 1:51:47 PM PST, Jameson Lopp <jameson.lopp@gmail.com> wrote:

On Wed, Dec 16, 2015 at 12:50 PM, Matt Corallo via bitcoin-dev <bitcoin-dev@lists.linuxfoundation.org> wrote:
A large part of your argument is that SW will take longer to deploy than a hard fork, but I completely disagree. Though I do not agree with some people claiming we can deploy SW significantly faster than a hard fork, once the code is ready (probably a six month affair) we can get it deployed very quickly. It's true the ecosystem may take some time to upgrade, but I see that as a feature, not a bug - we can build up some fee pressure with an immediate release valve available for people to use if they want to pay fewer fees.

On the other hand, a hard fork, while simpler for the ecosystem to upgrade to, is a 1-2 year affair (after the code is shipped, so at least 1.5-2.5 from today if we all put off heads down and work). One thing that has concerned me greatly through this whole debate is how quickly people seem to think we can roll out a hard fork. Go look at the distribution of node versions on the network today and work backwards to get nearly every node upgraded... Even with a year between fork-version-release and fork-activation, we'd still kill a bunch of nodes and instead of reducing their security model, lead them to be outright robbed.


Over a year seems to be an extraordinarily long time frame is for deploying a hard fork. It looks like 75% of reachable nodes have upgraded in the past 6 months while as much as 25% may not have been upgraded in over a year. Howev er, viewing historical stats of version upgrades doesn't seem to be an appropriate comparison because node operators have never been faced with the same incentive to upgrade. We can point to unintentional forks in the past that have been resolved fairly quickly by reaching out to miners, but it's also a poor comparison. Unfortunately, we have no way of knowing what percentage of nodes are economically important - a great deal of them may be running and not even be used by the operators.

Perhaps it would be better if we were to formalize the expectations for full node operators, but it seems to me that node operators have a responsibility to keep themselves informed and decide when it is appropriate to update their software. I'm not so sure that it's the rest of the ecosystem's responsibility to wait around for laggards.

- Jameson

On December 16, 2015 12:38:30 PM PST, Jeff Garzik via bitcoin-dev <bitcoin-dev@lists.linuxfoundation.org> wrote:

1. Summary

Segregated Witness (SegWitness, SW) is being presented in the context of Scaling Bitcoin.  It has useful attributes, notably addressing a major malleability vector, but is not a short term scaling solution.

2. Definitions

Import Fee Event, ECE, TFM, FFM from previous email.

Older clients - Any software not upgraded to SW

Newer clients - Upgraded, SW aware software

Block siz e - refers to the core block economic resource limit ed by MAX_BLOCK_SIZE.  Witness data (or extension block data) is excluded.  Requires a hard fork to change.

Core block - Current bitcoin block, with upper bound MAX_BLOCK_SIZE.  Not changed by SW.

Extended transaction - Newer, upgraded version of transaction data format.

Extended block - Newer, upgraded version of block data format.

EBS - Extended block size.  Block size seen by newer clients.

3. Context of analysis

One proposal presents SW in lieu of a hard fork block size increase.  This email focuses directly on that.

Useful features outside block size context, such as anti-malleability or fraud proof features, are not covered in depth.

4.1.  Observations on data structure formats and views

SW creates two views of each transaction and block.  SW has blocks and extended blocks.  Similarly, there exists transactions and extended transactions.

This view is rendered to clients depending on compatibility level.  Newer clients see extended blocks and extended transactions.  Older clients see blocks (limit 1M), and do not s ee extended blocks.  Older clients see upgraded transactions as unsigned, anyone-can-pay transactions.

Each extended transaction exists in two states, one unsigned and one signed, each of which passes validation as a valid bitcoin transaction.

4.2.  Observations on behavior of older transaction creation

Transactions created by older clients will not use the extended transaction format.  All data is stored the standard 1M block as today.

4.3.  Observations on new block economic model

SW complicates block economics by creating two separate, supply limited resources.

The core block economic resource is heavily contended.  Older clients use core blocks exclusively.  New er clients use core block s more conservatively, storing as much data as possible in extended blocks.

The extended block economic resource is less heavily contended, though that of course grows over time as clients upgrade.

Because core blocks are more heavily contended, it is presumed that older clients will pay a higher fee than newer clients (subject to elasticity etc.).

5.1.  Problem:  Pace of roll-out will be slow - Whole Ecosystem must be considered.

The current apparent proposal is to roll out Segregated Witness as a soft fork, and keep block size at 1M.

The roll-out pace cannot simply be judged by soft fork speed - which is months at best.  Analysis must the layers above:  Updating bitcoin-core (JS) and bitcoinj (Java), and then the timelines to roll out those updates to apps, and then the timeline to update those apps to create extended transactions.

Overall, wallet software and programmer libraries must be upgraded to make use of this new format, adding many more months (12+ in some stacks) to the roll out timeline.  In the meantime, clients continue to contend entirely for core block space.

5.2.  Problem:   Hard fork to bigger block size Just Works(tm) with most software, unlike SW.

A simple hard fork such as BIP 102 is automatically compatible with the vast range of today's ecosystem software.

SW requires merchants to upgrade almost immediately, requires wallet and other peripheral software upgrades to make use of.  Other updates are opt-in and occur more slowly.  BIP 70 processors need some updates.

The number of LOC that must change for BIP 102 is very small, and the problem domain well known, versus SW.

5.3.  Problem:   Due to pace, Fee Event not forestalled.

Even presuming SW is merged into Bitcoin Core tomorrow, this does not address the risk of a Fee Event and associated Economic Change in the coming months.

5.4.  Problem:   More complex economic policy, new game theory, new bidding structure risks.

Splitting blocks into two pieces, each with separate and distinct behaviors and resource values, creates two fee markets.

Having two pricing strata within each block has certainly feasible - that is the current mining policy of (1) fee/KB followed by (2) priority/age.

Valuable or not - e.g. incentivizing older clients to upgrade - the fact remains that SW creates a more-complex bidding structure by creating a second economic resource.

This is clearly a change to a new economic policy with standard risks associated with that.  Will that induce an Economic C hange Event (see def last email)?  Unlikely, due to slow rollout pace.

5.5.  Problem:  Current SW mining algorithm needs improvement

Current SW block template maker does a reasonable job, but makes some naive assumptions about the fee market across an entire extended block.  This is a mismatch with the economic reality (just described).

5.6.   Problem:  New, under-analyzed attack surfaces

Less significant and fundamental but still worth noting.

This is not a fundamental SW problem, but simply standard complexity risk factors:  splitting the signatures away from transactions, and creating a new apparently-uns igned version of the transaction opens t he possibility of some network attacks which cause some clients to degrade down from extended block to core block mode temporarily.

There is a chance of a failure mode that fools older clients into thinking fraudulent data is valid (judgement: unlikely vis hashpower but not impossible)

6. Conclusions and recommendations

It seems unlikely that SW provides scaling in the short term, and SW introduces new economics complexities.

A "short term bump" hard fork block size increase addresses economic and ecosystem risks that SW does not.

Bump + SW should proce ed in parallel, independent tracks, as orthogonal issues.

7. Appendix - Other SW comments

Hard forks provide much stronger validation, and ensure the network operates at a fully trustless level.

SW hard fork is preferred, versus soft fork.  Soft forking SW places a huge amount of trust on miners to validate transaction signatures, versus the rest of the network, as the network slowly upgrades to newer clients.

An SW hard fork could also add several zero-filled placeholders in a merkle tree for future use.













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