Re: [Bitcoin-development] Fee drop

[Mike Hearn <mike@plan99.net>]

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There are two possibilities.

One is that the value of transactions with the new lower fee is outweighed
by increased orphan costs and miners refuse to include them en-masse.
Wallet authors lose the staring match and go back to setting higher fees
until such a time as block propagation is optimised and the orphan costs go
down. Nodes that are encountering memory pressure can increase their min
relay fee locally until their usage fits inside their resources. It's
annoying to do this by hand but by no means infeasible.

The other is that the total value of transactions even with the lower fee
is not outweighed by orphan costs. The value of a transaction is higher
than its simple monetary value - the fact that Bitcoin is useful, growing
and considered cheap also has a value which is impossible to calculate, but
we know it's there (because Bitcoin does not exist in a vacuum and has
competitors). In this case miners stop including lots of useful
transactions that represent desired economic activity and are put under
pressure by the community to change their policies. If all miners do this
and making small blocks is considered errant behaviour, then we're back to
the same situation we're in today.

The possibility you're worried about - that someone does a DoS attack by
flooding the network with small transactions - is only an issue in the
first situation, and it is by no means the easiest or cheapest way to DoS
Bitcoin. We all want to see more DoS resistance but basically any change to
Bitcoin can be objected to on anti-DoS grounds at the moment, and this will
remain the case until someone steps up to spend significant time on
resource scheduling and code audits.

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