Re: [bitcoin-dev] summarising security assumptions (re cost metrics)

[Gavin Andresen <gavinandresen@gmail.com>]

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On Sun, Nov 8, 2015 at 12:19 PM, Bryan Bishop <kanzure@gmail.com> wrote:

> Gavin, could you please provide some clarity around the definition and
> meaning of "key-holder [decentralization]"? Is this about the absolute
> number of key-holders? or rather about the number of transactions (per unit
> time?) that key-holders make? Both/other?
>

Both.  If few transactions are possible, then that limits the number of
key-holders who can participate in the system.

Imagine the max block size was really small, and stretch your imagination
and just assume there would be enough demand that those small number of
transactions pay enough transaction fees to secure the network. Each
transaction must, therefore, pay a high fee. That limits the number of
keyholders to institutions with very-large-value transactions-- it is the
"Bitcoin as a clearing network for big financial players" model.

Using the Lightning Network doesn't help, since every Lightning Network
transaction IS a set of Bitcoin transactions, ready to be dropped onto the
main chain. If those Lightning Network transactions don't have enough fees,
then the whole security of the Lightning Protocol falls apart (since it
relies on being able to get timelocked transactions confirmed on the main
chain in case your trading partner cheats).

There is video of the Poon/Dryja talk:
https://youtu.be/TgjrS-BPWDQ?t=41m58s

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Gavin Andresen

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