Bitcoin mining is analogous to the mining of gold, but its digital form. The process involves specialized computers solving algorithmic equations or hash functions. These problems help miners to confirm blocks of transactions held within the network. Bitcoin mining provides a reward for miners by paying out in Bitcoin in turn the miners confirm transactions on the blockchain. Miners introduce new Bitcoin into the network and also secure the system with transaction confirmation.
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Sounds insane, right? Not if you realize Bitcoin works only because it is an economic system. Everything in Bitcoin that falls under the purview of cutthroat market competition works, and everything that doesn't, doesn't.
- Security: miners compete ruthlessly on hashrate. This prevents 51% attacks. Security in Bitcoin is fully within the purview of cutthroat market competition, and the result is that it works and works excellently.
- Networking: miners don't yet compete on networking to any great degree (Joannes Vermorel argues convincingly that the bandwidth and equipment requirements for even terabyte blocks are no great budgetary strain even for small miners). If they did, it would ensure they have the fat pipes needed for global scale, far in advance. The artificial blocksize cap is preventing networking from falling fully under the purview of cutthroat market competition, and therefore it doesn't fully work: we apparently (since some are balking at puny 128MB blocks) have laggard miners who have not upgraded to even mid-grade networking infrastructure or don't have the technical chops to do so. Removing the cap or raising it aggressively is the only way to incentivize miners to upgrade on an individual level (meaning, to avoid free riders; yes some proactive miners may upgrade early but it is a bad investment if the majority doesn't come along).
- Node code: The apparent reliance on volunteer dev teams to supply node client code has effectively subsidized laggard miners in this area, keeping the node code from falling fully under the purview of cutthroat market competition, and as a result - surprise, surprise - the node code is insufficient and "lots of work is needed to get to 128MB."
The error here is this is seen as a reason not to lift the cap. "We cannot raise the cap or miners would be forced to do work!" This is stated un-ironically, with no awareness that some miners being left behind and some miners making it is exactly how Bitcoin always had to work.
This is a cry to leave node code optimization out of the purview of cutthroat market competition, because apparently some believe that "cutthroat" has something to do with the result -- the kind of socialist mindset that thinks cutthroat competion among seatbelt makers would lead to seatbelts that kill you. Anyone who understands economics knows nothing could be further from the truth.
The rallying cry of the Core-style socialist mentality is that "Node code is too important to be left to the market, we need good Samaritan devs to provide it for all miners so that no miner is left behind." The ultimate result of shielding men from the effects of folly, is to fill the world with fools.
Likewise, the ultimate result of shielding miners from their inability or unwilliness to suitably optimize their node software is to fill Bitcoin with unprofessional miners who can't take us to global adoption.
Without the incentive to upgrade networking and codebase, Bitcoin lacks the crucial vetting process that Bitcoin need in order to distill miners into a long tail of professionals who have what it takes to ride this train all the way to a billion users, quickly and securely.
I challenge anyone to describe how they think Bitcoin can professionalize as long as there remains an effective subsidy for laggard miners in the areas of networking and node optimization (not meaning protocol optimization, but rather things like parallel validation). As painful as it may seem, the only way Bitcoin scales is over the bankrupt shells of many miners who didn't have what it takes. The cruft cannot come along for the ride.
This means orphan battles, even if just a little at a time. It means stress tests of rapidly increasing scale. While killing off too much hashpower too fast is in no one's interest (hahsrate gets too low), moving at a speed that is fast yet manageable by most big-league pros is. And really, the changes that need to be made aren't even reputed by anyone to be incredibly hard problems once you accept, as Satoshi did, that "it ends in datacentres and big server farms."
The fact that people are still arguing against 128MB by referencing tests with laptop nodes suggests that's the real problem here. Core's full node religion still has sway, despite being manufactured from whole cloth. Also known as Blockstream Syndrome, as a play off Stockholm Syndrome (where captives begin to sympathize with their captors).
Whatever the reasons given, critics of removing the cap invariably appeal to the infrastructure "not being ready" as if that were a bad thing. It's a good thing!
First of all, if we were to wait for all miners to be ready, we would be waiting for far too long. The right approach, to be determined by the market, is to move ahead somewhere between when 51% are ready and say 90% are ready, which is exactly what we can expect to happen without a cap.
The incentives are such that it it profitable to sheer away some laggard miners but not too many (as culling too many at a time leaves BCH open to hashpower attack by BTC miners; over the longer term though it incentivizes pros to enter and take the place of the failed miners, making BCH even more secure).
Secondly, the idea of a monolithic "infrastructure" ignores the secret sauce that makes Bitcoin work: miners in competition. Some are expected to fail to be ready! If not, how can Bitcoin miners get any more professional? Only the removal or reformation of the laggards can ever ensure Bitcoin ends up with professional infrastructure.
This vetting process is inevitable and essential, and it must apply to all aspects of Bitcoin that we want to see professionalized, including node software.
Now leaving aside a miner filling his block with his own 0-fee transactions (which can be dealt with by other miners rejecting blocks with too many 0-fee txs of low coin age*), Greg Maxwell's "big block attack" where big miners try to terrorize smaller (less well capitalized) miners using oversized blocks that a sizable minority of the network can't handle due to their slow networking is in fact exactly how Bitcoin MUST scale.
It's not an attack, it's a stress test, and one Bitcoin literally cannot scale without. What he called an attack is the solution to scaling, not any kind of problem. Stress tests are incentivized
in Bitcoin as a way of calling the bluff of the lazy miners. You gamble some money on an "attack," see who the slowpokes are and take their block rewards for your own.
No miners had the balls to do this so far, but they will soon or Bitcoin dies due to the halvings in a few more years, as fee volume won't sustain security. As big blockers said to Core, there no room for arbitrary "conservatism" in the face of an oncoming train.
Finally, I leave you with a thought experiment. Imagine somehow the community of volunteer developers in Bitcoin was so incredibly generous that it offered all miners ASIC designs, mining pool software, and all manner hashing optimizations to the point that miners merely had to buy ASICs and plug them in with no need to understand anything at all, and no need to try innovating on their own with ASIC design since these incredibly skilled volunteers trumped everything they could possibly come up with. Now naturally this situation must eventually come to an end, as the real pros step in, like Samsung.
With security thereby left out of the purview of cutthroat market competition, thanks to overweening volunteerism that continued for too long (no problem with volunteers at the start, just a child isn't born into the world an adult and needs parenting at first), these miners would be wholly unvetted, unprepared, unable to scale up their hashing operations and be obliterated by Samsung or maybe a government 51% attack to kill Bitcoin.
The point here is there is a formative period, and then there is adulthood. Growing up is a process of relying less and less on handouts, being exposed more and more to the cutthroat realities of the world. When is Bitcoin going to grow up? The halvings place a time limit on Bitcoin's security, and overprotective parents (those who don't want to remove the cap) -- in an ostensible effort to be conservative -- may end up keeping Honeybadger holed up his figurative mom's basement too long for him to accomplish his mission.
*and if your response is, "This doesn't exist yet in any clients," I think you have missed the point of this post: again, that's a good thing. Let miners who are too incompetent to figure out something that simple get sloughed away. Do we really want such sluggards? If so and you're a dev, volunteer some code to them. If not, try to get hired by them instead. I think the pay will be much better.
And if your response is, "But that means some miners might get orphaned unexpectedly and cry foul," then once again I say, that's a good thing. Block creation is fundamentally a speculative process. In other words, it's a gamble, by design. It's a Keynesian beauty contest wherein each miner tries to mine the greediest block they can get away with while not upping their orphan risk appreciably. Messing around with low-coin-age 0-fee tx stuffing might get you orphaned, boo-hoo. Miners are under no obligation to tell other miners their standards for block beauty in advance, even though they typically have done so thus far. Miners are ALWAYS free to orphan a block for ANY reason. That they generally keep to consistent, well-broadcast rules is a courtesy, not a necessity. Preventing general assholery isn't necessarily best effected by being up-front about what you will punish, but even if it is, miners can do that, too (let them figure it out, as they do for hashpower -- unless you have a good argument for why there is no possible solution or the solution is necessary too hard for a professional organization to figure out in reasonable time; that's the bar for objection, not "well the volunteer dev code doesn't do this yet").
And if your response is, "That will increase the orphan rate," yes and orphans already happen routinely so it is certainly not any catastrophe. See it as a detox process. It might put some small strain on the network as the slowpokes and dickheads are smacked, but again miners still choose this level of orphaning as well by the same Keynesian-beauty-contest dynamic. Orphans are a key part of why Bitcoin works and why it can scale, but if the orphan rate would interfere with service too much (unlikely if you believe 0-conf works), that also gets taken into account in the beauty contest and gets balanced with the benefits of punishing bad behavior and the costs of stomaching the poison block. The offending miner can also be un-whitelisted, returned to rando-node status, but again why are we trying to coddle miners by coming up with their strategies for being better professionals for them? Hopefully it is clear by now that all such arguments are central planning, which is bad at least after an early parental phase which I think has long since passed its natural life.
I've posted this before and was criticized because it was claimed this was a future problem. Actually, the block reward goes pretty low pretty fast. Already 80% of coins are already mined. This is a future problem, but guess what? So are cores hypothetical centralization problems that are supremely trumped by this problem. submitted by
Cores hypothetical in the future problem is that miners will geographically centralize because the latency of relaying large blocks will result in close miners having an advantage. The relay network which allows blocks to transmit without latency issues shouldn't count according to core because it is not "decentralized".
The other part of their "decentralization" argument is that we need to all run full nodes to make transactions, but then fail to give an example of anyone being defrauded by an SPV wallet. They then give statistics for how full nodes are dropping (without factoring in that the original bitcoin wallets were all full nodes which skews the statistics)
Bitcoin transactions are broadcast to the network by the sender, and all peers trying to solve blocks collect the transaction records and add them to the block they are working to solve. Miners get incentive to include transactions in their blocks because of attached transaction fees. Blocks are files where data pertaining to the Bitcoin network are permanently recorded, and once written, cannot be altered or removed. Blocks in the main chain (black) are the longest series of blocks that go from the genesis block (green) to the current block. Purple blocks are blocks that are not in the longest chain and therefore not used. A block chain is a transaction database shared by all nodes participating in a system based on the Bitcoin protocol. A full copy of a currency's block chain contains every transaction ... Create a Wallet. Sign up for the Exchange. Buy Bitcoin in minutes. Get Started. Twitter Instagram Medium All blocks with a block height less than 6,930,000 are entitled to receive a block subsidy of newly created bitcoin value, which also should be spent in the coinbase transaction. (The block subsidy started at 50 bitcoins and is being halved every 210,000 blocks—approximately once every four years. As of November 2017, it’s 12.5 bitcoins.)
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