Off-chain transactions and miner fees

Off-chain transactions and miner fees
2015-08-10  5:01 ` Joseph Poon
                   ` (2 more replies)
  
From: info @ 2015-08-09 22:20 UTC (permalink / raw)
  To: bitcoin-dev

Hello all,

one argument I often read on this mailing list is that it's essential to
reward miners with transaction fees at some point to secure the network.

Off-chain transactions, whether it's Lightning or something else,
potentially extract fees, which may otherwise be paid to miners, if the
transactions were actually on-chain.

In this context, wouldn't it be contradictory, maybe even harmful, to
aim for an environment, where some/many/most transactions are off-chain?

I have not yet seen this conflict addressed in the recent discussions.



 permalink raw reply	[|nested]
2015-08-10  5:01 ` 
                   ` 
  
From: info @ 2015-08-09 22:20 UTC (permalink / raw)
  To: bitcoin-dev

Hello all,

one argument I often read on this mailing list is that it's essential to
reward miners with transaction fees at some point to secure the network.

Off-chain transactions, whether it's Lightning or something else,
potentially extract fees, which may otherwise be paid to miners, if the
transactions were actually on-chain.

In this context, wouldn't it be contradictory, maybe even harmful, to
aim for an environment, where some/many/most transactions are off-chain?

I have not yet seen this conflict addressed in the recent discussions.



 permalink raw reply	[|nested]
2015-08-09 22:20 [bitcoin-dev] Off-chain transactions and miner fees info
  2015-08-10  5:01 ` Joseph Poon

  2015-08-10  8:39   ` Thomas Zander
                     ` (2 more replies)
  2015-08-10 18:50 ` Anthony Towns
  
From: Rune K. Svendsen @ 2015-08-10  5:57 UTC (permalink / raw)
  To: info;  bitcoin-dev

Nodes in the Lightning network earn fees that wouldn't be there if it weren't for the Lightning network. The base Bitcoin layer can't handle the transaction throughout that Lightning can, so the Lightning fees were never available to Bitcoin miners in the first place.

What Lightning does is raise the value of a transaction on the block chain. Imagine you're a Lightning node, and in order to collect your fees, that you've earned over the past month, you have to settle on the blockchain. If you've earned, say, 0.5 BTC in fees, you can attach a huge 0.005 BTC fee to the Bitcoin settlement transaction. The miners earn a larger fee, and you make sure your transaction gets into the blockchain quickly, and you can afford to pay this fee because you've made much more on the Lightning transactions you've routed.

/Rune



> Den 10/08/2015 kl. 00.20 skrev info--- via bitcoin-dev <bitcoin-dev@lists•linuxfoundation.org>:
> 
> Hello all,
> 
> one argument I often read on this mailing list is that it's essential to
> reward miners with transaction fees at some point to secure the network.
> 
> Off-chain transactions, whether it's Lightning or something else,
> potentially extract fees, which may otherwise be paid to miners, if the
> transactions were actually on-chain.
> 
> In this context, wouldn't it be contradictory, maybe even harmful, to
> aim for an environment, where some/many/most transactions are off-chain?
> 
> I have not yet seen this conflict addressed in the recent discussions.
> 
> _______________________________________________
> bitcoin-dev mailing list
> bitcoin-dev@lists•linuxfoundation.org
> https://lists.linuxfoundation.org/mailman/listinfo/bitcoin-dev


 permalink raw reply	[|nested]
2015-08-09 22:20 [bitcoin-dev] Off-chain transactions and miner fees info
  2015-08-10  5:01 ` Joseph Poon

  2015-08-10  8:39   ` 
                     ` 
  2015-08-10 18:50 ` Anthony Towns
  
From: Rune K. Svendsen @ 2015-08-10  5:57 UTC (permalink / raw)
  To: info;  bitcoin-dev

Nodes in the Lightning network earn fees that wouldn't be there if it weren't for the Lightning network. The base Bitcoin layer can't handle the transaction throughout that Lightning can, so the Lightning fees were never available to Bitcoin miners in the first place.

What Lightning does is raise the value of a transaction on the block chain. Imagine you're a Lightning node, and in order to collect your fees, that you've earned over the past month, you have to settle on the blockchain. If you've earned, say, 0.5 BTC in fees, you can attach a huge 0.005 BTC fee to the Bitcoin settlement transaction. The miners earn a larger fee, and you make sure your transaction gets into the blockchain quickly, and you can afford to pay this fee because you've made much more on the Lightning transactions you've routed.

/Rune



> Den 10/08/2015 kl. 00.20 skrev info--- via bitcoin-dev <bitcoin-dev@lists•linuxfoundation.org>:
> 
> Hello all,
> 
> one argument I often read on this mailing list is that it's essential to
> reward miners with transaction fees at some point to secure the network.
> 
> Off-chain transactions, whether it's Lightning or something else,
> potentially extract fees, which may otherwise be paid to miners, if the
> transactions were actually on-chain.
> 
> In this context, wouldn't it be contradictory, maybe even harmful, to
> aim for an environment, where some/many/most transactions are off-chain?
> 
> I have not yet seen this conflict addressed in the recent discussions.
> 
> _______________________________________________
> bitcoin-dev mailing list
> bitcoin-dev@lists•linuxfoundation.org
> https://lists.linuxfoundation.org/mailman/listinfo/bitcoin-dev


 permalink raw reply	[|nested]
2015-08-10  5:57 ` Rune K. Svendsen
  2015-08-10  8:39   ` Thomas Zander

  2015-08-10 15:35   ` info
  
From: GC @ 2015-08-10  9:01 UTC (permalink / raw)
  To: Rune K. Svendsen, info;  bitcoin-dev

Following this, Bitcoin and proposed payment networks like LN will be
competing for fees based on duration and cost to process transactions.

If fees on Bitcoin network stay low and zero-conf txns are possible,
competing payment networks will need some very special features to survive
and make money for their investors.

On 10/8/15 10:27 am, "Rune K. Svendsen via bitcoin-dev"
<bitcoin-dev@lists•linuxfoundation.org> wrote:

>Nodes in the Lightning network earn fees that wouldn't be there if it
>weren't for the Lightning network. The base Bitcoin layer can't handle
>the transaction throughout that Lightning can, so the Lightning fees were
>never available to Bitcoin miners in the first place.
>
>What Lightning does is raise the value of a transaction on the block
>chain. Imagine you're a Lightning node, and in order to collect your
>fees, that you've earned over the past month, you have to settle on the
>blockchain. If you've earned, say, 0.5 BTC in fees, you can attach a huge
>0.005 BTC fee to the Bitcoin settlement transaction. The miners earn a
>larger fee, and you make sure your transaction gets into the blockchain
>quickly, and you can afford to pay this fee because you've made much more
>on the Lightning transactions you've routed.
>
>/Rune
>
>
>
>> Den 10/08/2015 kl. 00.20 skrev info--- via bitcoin-dev
>><bitcoin-dev@lists•linuxfoundation.org>:
>> 
>> Hello all,
>> 
>> one argument I often read on this mailing list is that it's essential to
>> reward miners with transaction fees at some point to secure the network.
>> 
>> Off-chain transactions, whether it's Lightning or something else,
>> potentially extract fees, which may otherwise be paid to miners, if the
>> transactions were actually on-chain.
>> 
>> In this context, wouldn't it be contradictory, maybe even harmful, to
>> aim for an environment, where some/many/most transactions are off-chain?
>> 
>> I have not yet seen this conflict addressed in the recent discussions.
>> 
>> _______________________________________________
>> bitcoin-dev mailing list
>> bitcoin-dev@lists•linuxfoundation.org
>> https://lists.linuxfoundation.org/mailman/listinfo/bitcoin-dev
>_______________________________________________
>bitcoin-dev mailing list
>bitcoin-dev@lists•linuxfoundation.org
>https://lists.linuxfoundation.org/mailman/listinfo/bitcoin-dev




 permalink raw reply	[|nested]
2015-08-10  5:57 ` Rune K. Svendsen
  2015-08-10  8:39   ` Thomas Zander
  2015-08-10  9:01   ` GC

  
From: info @ 2015-08-10 15:35 UTC (permalink / raw)
  To: bitcoin-dev

> Nodes in the Lightning network earn fees that wouldn't be there if it
weren't for the Lightning network. The base Bitcoin layer can't handle
the transaction throughout that Lightning can, so the Lightning fees
were never available to Bitcoin miners in the first place.

This is questionable to some degree:

While it's given that limited space inherently limits the number of
on-chain transactions, one could argue that the limited space could
result in significantly higher fees due to the competition.

Likewise, if we assume there were a higher/no limit, then it would also,
or especially, be favorable to pay miners, instead of
off-chain-serivce-provider X.

In both scenarios, with, or without capacity limit, it doesn't seem
favorable to move transactions off-chain.

-------- Original Message  --------
Subject: Re: [bitcoin-dev] Off-chain transactions and miner fees
From: Rune K. Svendsen <runesvend@gmail•com>
To: info@bitmarkets•net <info@bitmarkets•net>
Cc: "bitcoin-dev@lists•linuxfoundation.org"
<bitcoin-dev@lists•linuxfoundation.org>
Date: Mon, 10 Aug 2015 07:57:30 +0200

> Nodes in the Lightning network earn fees that wouldn't be there if it weren't for the Lightning network. The base Bitcoin layer can't handle the transaction throughout that Lightning can, so the Lightning fees were never available to Bitcoin miners in the first place.
> 
> What Lightning does is raise the value of a transaction on the block chain. Imagine you're a Lightning node, and in order to collect your fees, that you've earned over the past month, you have to settle on the blockchain. If you've earned, say, 0.5 BTC in fees, you can attach a huge 0.005 BTC fee to the Bitcoin settlement transaction. The miners earn a larger fee, and you make sure your transaction gets into the blockchain quickly, and you can afford to pay this fee because you've made much more on the Lightning transactions you've routed.
> 
> /Rune
> 
> 
> 
>> Den 10/08/2015 kl. 00.20 skrev info--- via bitcoin-dev <bitcoin-dev@lists•linuxfoundation.org>:
>>
>> Hello all,
>>
>> one argument I often read on this mailing list is that it's essential to
>> reward miners with transaction fees at some point to secure the network.
>>
>> Off-chain transactions, whether it's Lightning or something else,
>> potentially extract fees, which may otherwise be paid to miners, if the
>> transactions were actually on-chain.
>>
>> In this context, wouldn't it be contradictory, maybe even harmful, to
>> aim for an environment, where some/many/most transactions are off-chain?
>>
>> I have not yet seen this conflict addressed in the recent discussions.
>>
>> _______________________________________________
>> bitcoin-dev mailing list
>> bitcoin-dev@lists•linuxfoundation.org
>> https://lists.linuxfoundation.org/mailman/listinfo/bitcoin-dev



 permalink raw reply	[|nested]
2015-08-10  8:39   ` Thomas Zander

  2015-08-10 21:16       ` Thomas Zander
  
From: Leo Wandersleb @ 2015-08-10 15:53 UTC (permalink / raw)
  To: bitcoin-dev

[-- Attachment #1: Type: text/plain, Size: 1379 bytes --]

On 08/10/2015 05:39 AM, Thomas Zander via bitcoin-dev wrote:
> On Monday 10. August 2015 07.57.30 Rune K. Svendsen via bitcoin-dev wrote:
>> What Lightning does is raise the value of a transaction on the block chain.
>> Imagine you're a Lightning node, and in order to collect your fees, that
>> you've earned over the past month, you have to settle on the blockchain. If
>> you've earned, say, 0.5 BTC in fees, you can attach a huge 0.005 BTC fee to
>> the Bitcoin settlement transaction. The miners earn a larger fee, and you
>> make sure your transaction gets into the blockchain quickly, and you can
>> afford to pay this fee because you've made much more on the Lightning
>> transactions you've routed.
> I don't buy that argument, you are saying a company will give away profits 
> because of... what? It can?
>
> The reason of it being faster makes no sense, as your example the channel has 
> been open for a month then he really doesn't care it takes 1, 10 or 50 blocks 
> before his transaction is included.  What is 5 hours wait on a month of profit?
>
I guess the assumption here is a full-block scenario where users of LN would be
willing to pay 100 times the fees users of crude transactions would be willing
to pay for the same limited space in the blockchain, simply because LN would
group 100 real world payments into 1 crude transaction.


[-- Attachment #2: OpenPGP digital signature --]
[-- Type: application/pgp-signature, Size: 473 bytes --]

 permalink raw reply	[|nested]
2015-08-09 22:20 [bitcoin-dev] Off-chain transactions and miner fees info
  2015-08-10  5:01 ` Joseph Poon
  2015-08-10  5:57 ` Rune K. Svendsen

  2015-08-10 19:14   ` Hector Chu
  2015-08-10 21:12   ` Eric Voskuil
  
From: Anthony Towns @ 2015-08-10 18:50 UTC (permalink / raw)
  To: bitcoin-dev

On Mon, Aug 10, 2015 at 12:20:36AM +0200, info--- via bitcoin-dev wrote:
> one argument I often read on this mailing list is that it's essential to
> reward miners with transaction fees at some point to secure the network.

That's not a universally held belief. See for example:

 https://en.bitcoin.it/wiki/Funding_network_security#Alternatives
 https://bitcointalk.org/index.php?topic=157141.0

It's also not clear to me what amount of security people actually "want".
In late May, Mike Hearn wrote:

 "Currently the Bitcoin community is being effectively taxed about
  $832,000 per day ... just to support mining! [...]

  We’re not spending so much on mining because we really need it. It’s
  because printing money distorts behaviour."

  -- https://medium.com/@octskyward/hashing-7d04a887acc8

If $832k (25*240 btc/day * $231 USD/btc) is too much, maybe $475k/day
(reward halved, at current price) will still be too much in a year's
time? If bitcoin's price rises at just 19% pa on average (which doesn't
seem like much if you're thinking in startup/VC terms?), then the block
reward will still be worth about $475k/day after it halves again to 6.25
coins per block. So maybe the block reward pays for bitcoin transactions
and fees are effectively zero right up until the day the block reward
goes away entirely?

In any event, the lightning network offers three potential benefits over
on-chain transactions:

 - lower fees
 - shorter confirmation times
 - no ongoing costs once the channel is closed

If you have zero fees, lightning is still interesting for quick
transactions (since they offer better assurance of payment than
zero-confirmation transactions), and also for microtransactions (where
spamming the blockchain and the UTXO db with thousands of transactions
just to move $1 from here to there isn't appealing).

> Off-chain transactions, whether it's Lightning or something else,
> potentially extract fees, which may otherwise be paid to miners, if the
> transactions were actually on-chain.

Every lightning transaction happens through a series of channels (at least
one, but realistically at least two; with any amount of decentralisation,
probably more likely somewhere in the range of three to twenty). Each
of those channels requires at least two blockchain transactions (one or
two to create the channel; one or three to close the channel and spend
the balances).

It's not 100% clear at this point, but keeping a lightning channel open
will probably have (hardware) costs that grow linearly in the number of
transactions [0]; in which case keeping them open forever won't be an
option, and they'll be closed when the cost of keeping it open is less
than the cost of resetting it on the blockchain (only one blockchain
transaction required). So in that case even if lightning is crazy popular,
there'll still be activity on the blockchain at whatever fee rate there
is, just by people trading off storage costs for blockchain fees.

[0] http://lists.linuxfoundation.org/pipermail/lightning-dev/2015-July/000057.html

Even if it's not the case, closing a channel eventually is probably
good practice in order to rollover keys. Channels also have a maximum
theoretical number of transactions, but that's likely on the order
of exa-transactions, so is probably irrelevant. Channel profitability
likely varies over time, and since channels lock up bitcoin, closing
less profitable channels so the funds can be used elsewhere is likely
also valuable. 

With all those things together, ballpark max lifetime of a random channel
(IMHO) is somewhere in the range of two weeks to two years. If lightning
is the only thing doing transactions on the blockchain and only using
250B/txn, 8M channels with an average lifetime of 2 weeks would fill
1MB blocks; as would 210M channels with an average lifetime of a year,
or 420M channels with an average lifetime of two years. Those sort
of numbers probably roughly cover lots of Americans having access to
a lightning based point-of-sale network to buy Starbucks, eg, but not
much more than that. (You need at least one channel per customer, plus
one per business, plus something on the order of log(N) hubs to connect
them all; having multiple channels is probably about as good an idea as
having multiple credit cards).

> In this context, wouldn't it be contradictory, maybe even harmful, to
> aim for an environment, where some/many/most transactions are off-chain?

Lightning transactions will have to pay for several things:

 - the blockchain fees for opening/closing the channel
 - the time value of the funds being used to keep the channels open,
   for each channel in the route from payer to payee
 - the maintenance costs of the hardware/software to run a lightning
   channel

By contrast, blockchain transactions just have to pay miners the
blockchain fee for the transaction; there's no other intermediaries
who have to be compensated. At some point, the latter will certainly
be cheaper than the former -- since the lightning network has to pay
for third parties' time value of bitcoin there should certainly be some
"sufficiently large" amount whose time value is higher than the bitcoin
txn fee, even for a very short txn time.

It's all a bit hypothetical though -- not only is lightning still
unimplemented as yet, but I think at present the time value of bitcoin is
effectively zero (ie, afaik people recommend "just buy and hold bitcoin
and wait for the next bubble", rather than "buy bitcoin and put it in
AwesomeBank's Term Deposit product and gain 3% pa"), and most of the
time fees seem to be basically zero too.

I think the general answer is that lightning relies on the blockchain --
if the blockchain doesn't work, neither does lightning. So whatever level
of txn fees it takes to make the blockchain work; whether that's $0/txn,
1c/txn or $50/txn, nodes in the lightning network will pay that fee,
and, presumably, pass it on to the lightning network's end users in the
form of txn fees on the lightning network.

Cheers,
aj



 permalink raw reply	[|nested]
2015-08-10 18:50 ` Anthony Towns

  2015-08-10 19:26     ` Anthony Towns
  2015-08-10 21:12   ` Eric Voskuil
  
From: Hector Chu @ 2015-08-10 19:14 UTC (permalink / raw)
  To: Anthony Towns;  Bitcoin Dev

[-- Attachment #1: Type: text/plain, Size: 361 bytes --]

On 10 August 2015 at 19:50, Anthony Towns via bitcoin-dev <
bitcoin-dev@lists•linuxfoundation.org> wrote:

> ...but I think at present the time value of bitcoin is effectively zero


Since bitcoin is liquid you forget that one can just sell off his bitcoin
for fiat and hold that for interest. The time value is thus given by the
yield curve of interest rates.

[-- Attachment #2: Type: text/html, Size: 687 bytes --]

 permalink raw reply	[|nested]
2015-08-10 19:14   ` Hector Chu

  2015-08-10 19:54       ` Hector Chu
  
From: Anthony Towns @ 2015-08-10 19:26 UTC (permalink / raw)
  To: Hector Chu;  Bitcoin Dev

On Mon, Aug 10, 2015 at 08:14:08PM +0100, Hector Chu wrote:
> On 10 August 2015 at 19:50, Anthony Towns via bitcoin-dev <
> bitcoin-dev@lists•linuxfoundation.org> wrote:
> > ...but I think at present the time value of bitcoin is effectively zero
> Since bitcoin is liquid you forget that one can just sell off his bitcoin
> for fiat and hold that for interest. The time value is thus given by the
> yield curve of interest rates.

Sure, that's a way to increase your net worth in real terms, but it only
works if your interest rate on your fiat account is greater than the
price rise in bitcoin over the same term. If you pull out a BTC today at
$300, put it in a bank account earning 3% interest for a year and then
buy $309 worth of bitcoin when the price has risen to $400 per BTC,
and only get 0.7725 of a bitcoin, that's not a winning proposition.
I'd call that earning a -22.75% rate (in bitcoin terms), while a 0%
rate would just be ending up with as many bitcoin after a year as you
started with. Note that in USD (and real) terms, in this scenario 77%
of a bitcoin is actually worth more after a year than 1 bitcoin is now.

You might get a positive rate of return on bitcoin invested today by
running an exchange or a gambling service of some sort; but I think
mostly, people are just sitting on their coins hoping they appreciate. If
so, (in my terminology at least) they're earning 0%, denominated in
bitcoin, and have a time-value of bitcoin of zero.

Cheers,
aj



 permalink raw reply	[|nested]
2015-08-10 19:26     ` Anthony Towns

  
From: Hector Chu @ 2015-08-10 19:54 UTC (permalink / raw)
  To: Anthony Towns;  Bitcoin Dev

[-- Attachment #1: Type: text/plain, Size: 1897 bytes --]

Nonsense. Hoping that the bitcoin price will rise is called speculation.
Hub operators won't want to do that, since prices can go down as well as
up. The money markets and government bond yield curve prices risk-free
rates of return, a guaranteed rise in value. These rates are always
positive.

On 10 August 2015 at 20:26, Anthony Towns <aj@erisian•com.au> wrote:

> On Mon, Aug 10, 2015 at 08:14:08PM +0100, Hector Chu wrote:
> > On 10 August 2015 at 19:50, Anthony Towns via bitcoin-dev <
> > bitcoin-dev@lists•linuxfoundation.org> wrote:
> > > ...but I think at present the time value of bitcoin is effectively zero
> > Since bitcoin is liquid you forget that one can just sell off his bitcoin
> > for fiat and hold that for interest. The time value is thus given by the
> > yield curve of interest rates.
>
> Sure, that's a way to increase your net worth in real terms, but it only
> works if your interest rate on your fiat account is greater than the
> price rise in bitcoin over the same term. If you pull out a BTC today at
> $300, put it in a bank account earning 3% interest for a year and then
> buy $309 worth of bitcoin when the price has risen to $400 per BTC,
> and only get 0.7725 of a bitcoin, that's not a winning proposition.
> I'd call that earning a -22.75% rate (in bitcoin terms), while a 0%
> rate would just be ending up with as many bitcoin after a year as you
> started with. Note that in USD (and real) terms, in this scenario 77%
> of a bitcoin is actually worth more after a year than 1 bitcoin is now.
>
> You might get a positive rate of return on bitcoin invested today by
> running an exchange or a gambling service of some sort; but I think
> mostly, people are just sitting on their coins hoping they appreciate. If
> so, (in my terminology at least) they're earning 0%, denominated in
> bitcoin, and have a time-value of bitcoin of zero.
>
> Cheers,
> aj
>
>

[-- Attachment #2: Type: text/html, Size: 2432 bytes --]

 permalink raw reply	[|nested]
2015-08-10 18:50 ` Anthony Towns
  2015-08-10 19:14   ` Hector Chu

  
From: Eric Voskuil @ 2015-08-10 21:12 UTC ( / )
  To: Anthony Towns, bitcoin-dev



Hi Anthony,

No belief can be shown to be universally held, and an appeal to
authority is also a logical fallacy for good reason.

The blog you quote is littered with flawed economic ideas. It's become a
pet peeve of mine that people refer to mining (and/or validation) as a
"tragedy of the commons" problem, or a "public good" subject to a "free
rider" problem. This betrays a fundamental misunderstanding of both
money and Bitcoin.

I'm not commenting on the other merits of your argument or others in
this thread, I mean just to dispute the validity of this particular
reference. Even the portion you quoted is quite absurd:

>> "We’re not spending so much on mining because we really need it.
>> It’s because printing money distorts behaviour."

We don't "really need" to prevent "printing money" - Bitcoin could
somehow get by without that constraint? Preventing the printing of money
is the only reason that Bitcoin exists.

The tragedy of the commons scenario properly applies only to property
controlled by the state. In the quoted blog the analogy is so misapplied
that it fundamentally misrepresents the forces at work in Bitcoin.

Bitcoin is not at all "like a lighthouse". State run lighthouses are
financed via taxation. That may be taxation of anything, whether or not
related to the shipping the lighthouse purports to protect. It may in
fact protect no shipping at all, since payment is generally completely
divorced from benefit, and the benefits may be completely divorced from
shipping. For example, preservation of jobs for lighthouse keepers and
the Coast Guard, or even nostalgia. Just as with a private grazing
field, a truly private lighthouse would not have a "commons problem" at all.

Bitcoin mining is financed by a fixed schedule of inflation and
transaction fees. State inflation is a tax on all holders of currency
and a form of default on state debt. This and other taxes fund
lighthouses. A tax is the seizure of someone else's property through
force. Bitcoin inflation is predictable, so the inflation cost is
factored in to its value before it is acquired, according to the
depreciation schedule, just like bond valuation for example. This means
it is NOT a tax, is merely a cost that is paid to miners for use of
their security services.

Bitcoin transaction "fees" are not fees in the state use-fee (taxation)
sense, since the fees are priced based on voluntary trade. The blog
misinterprets who is paying the cost of securing a transaction when it
claims, "it's the sender who pays." Both parties to a transaction bear
the cost of using any given medium of exchange. If the receiver is
concerned about double spending risk, it's the sender who will have to
compensate with time and/or money. But this is just as much a cost to
the receiver as it has raised the effective price of his sales with the
difference in money accruing to the third party.

Finally, transaction fees *are* mining contracts. Creating *another*
system of mining contracts initiated by a receiver would do nothing to
change the economics, but it would significantly complicate the
implementation (raising costs generally). The cost of paying a mining
contract would of course be paid by the sender, in terms of increased
price charged by the receiver.

I believe that a fundamental misunderstanding of the important
distinction between voluntary trade and state-controlled trade is
underpinning a lot of confusion and misunderstanding with respect to the
block size debate. Bitcoin does not have a commons problem specifically
because it's designed to resist state control. It's only in the loss of
that independence that such a problem would arise (and effectively kill
Bitcoin altogether).

Ironically the desire to fix a non-existent commons problem in Bitcoin
seems to be a driving force behind what may in fact weaken its only
defence against eventually becoming a commons.

e


On 08/10/2015 11:50 AM, Anthony Towns via bitcoin-dev wrote:
> On Mon, Aug 10, 2015 at 12:20:36AM +0200, info--- via bitcoin-dev wrote:
>> one argument I often read on this mailing list is that it's essential to
>> reward miners with transaction fees at some point to secure the network.
> 
> That's not a universally held belief. See for example:
> 
>  https://en.bitcoin.it/wiki/Funding_network_security#Alternatives
>  https://bitcointalk.org/index.php?topic=157141.0
> 
> It's also not clear to me what amount of security people actually "want".
> In late May, Mike Hearn wrote:
> 
>>  "Currently the Bitcoin community is being effectively taxed about
>>   $832,000 per day ... just to support mining! [...]
>> 
>>   We’re not spending so much on mining because we really need it. It’s
>>   because printing money distorts behaviour."
> 
>   -- https://medium.com/@octskyward/hashing-7d04a887acc8
2015-08-10 15:53     ` Leo Wandersleb

  
From: Thomas Zander @ 2015-08-10 21:16 UTC (permalink / raw)
  To: bitcoin-dev

On Monday 10. August 2015 12.53.33 Leo Wandersleb via bitcoin-dev wrote:
> > The reason of it being faster makes no sense, as your example the channel
> > has  been open for a month then he really doesn't care it takes 1, 10 or
> > 50 blocks before his transaction is included.  What is 5 hours wait on a
> > month of profit?
>
> I guess the assumption here is a full-block scenario where users of LN would
> be willing to pay 100 times the fees users of crude transactions would be
> willing to pay for the same limited space in the blockchain, simply because
> LN would group 100 real world payments into 1 crude transaction.

Thats exactly what I argued makes no sense to me.

Why pay for something you don't need? Paying something Just because you have 
money is really not a good business strategy. I doubt that will happen.

-- 
Thomas Zander


 permalink raw reply	[|nested]