Re: [bitcoin-dev] block size - pay with difficulty

[Btc Drak <btcdrak@gmail.com>]

Maybe Jeff can clarify but my communications with him seemed to imply
he didn't think any kind of difficulty penalty scheme is workable. I
strongly dispute that assertion.

On Thu, Sep 3, 2015 at 7:23 PM, Jorge Timón
<bitcoin-dev@lists.linuxfoundation.org> wrote:
> Greg, I believe Jeff is focusing on BtcDrak's proposal (
> https://gist.github.com/btcdrak/1c3a323100a912b605b5 ) where the
> increased nBits are used to vote for the block size to raise
> permanently ( or until it gets voted down).
> His arguments don't seem to apply to your original proposal (where the
> size is only increased for that block).
>
>
> On Thu, Sep 3, 2015 at 7:57 PM, Gregory Maxwell via bitcoin-dev
> <bitcoin-dev@lists.linuxfoundation.org> wrote:
>> On Thu, Sep 3, 2015 at 2:40 PM, Jeff Garzik <jgarzik@gmail.com> wrote:
>>> Expanding on pay-with-diff and volatility (closing comment),
>>>
>>> Users and miners will have significant difficulty creating and/or predicting
>>> a stable block size (and fee environment) with pay-with-diff across the
>>> months.  The ability of businesses to plan is low.  Chaos and
>>> unpredictability are bad in general for markets and systems.  Thus the
>>> binary conclusion of "not get used" or "volatility"
>>
>> Sorry, I'm still not following.  I agree that predictability is important.
>>
>> I don't follow where unpredictability is coming from here. Most (all?)
>> of the difficulty based adjustments had small limits on the difficulty
>> change that wouldn't have substantially changed the interblock times
>> relative to orphaning.
>>
>>> It's written as 'a' and/or 'b'.  If you don't have idle hashpower, then paying with difficulty requires some amount of collusion ('a')
>>> Any miner paying with a higher difficulty either needs idle hashpower, or self-increase their own difficulty at the possible opportunity cost of losing an entire block's income to another miner who doesn't care about changing the block size.  The potential loss does not economically compensate for size increase gains in most cases, when you consider the variability of blocks (they come in bursts and pauses) and the fee income that would be associated
>>
>> What the schemes propose is blocksize that increases fast with
>> difficulty over a narrow window. The result is that your odds of
>> producing a block are slightly reduced but the block you produce if
>> you do is more profitable: but only if there is a good supply of
>> transactions which pay real fees compariable to the ones you're
>> already taking.  The same trade-off exists at the moment with respect
>> to orphaning risk and miners still produce large blocks, producing a
>> larger block means a greater chance you're not successful (due to
>> orphaning) but you have a greater utility.  The orphing mediated risk
>> is fragile and can be traded off for centeralization advantage or by
>> miners bypassing validation, issues which at least so far we have no
>> reason to believe exist for size mediated schemes.
>>
>> As you know, mining is not a race (ignoring edge effects with
>> orphaning/propagation time). Increasing difficulty does not put you at
>> an expected return disavantage compared to other miners so long as the
>> income increases at least proportionally (otherwise pooling with low
>> diff shares would be an astronomically losing proposition :)!).
>>
>> Pay-for-size schemes have been successfully used in some altcoins
>> without the effects you're suggesting.
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