Re: A suggestion for reducing the size of the UTXO database

Re: A suggestion for reducing the size of the UTXO database
2015-05-09 18:45 ` Peter Todd
                   ` (6 more replies)
  
From: Jim Phillips @ 2015-05-09 17:09 UTC (permalink / raw)
  To: bitcoin-development

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Forgive me if this idea has been suggested before, but I made this
suggestion on reddit and I got some feedback recommending I also bring it
to this list -- so here goes.

I wonder if there isn't perhaps a simpler way of dealing with UTXO growth.
What if, rather than deal with the issue at the protocol level, we deal
with it at the source of the problem -- the wallets. Right now, the typical
wallet selects only the minimum number of unspent outputs when building a
transaction. The goal is to keep the transaction size to a minimum so that
the fee stays low. Consequently, lots of unspent outputs just don't get
used, and are left lying around until some point in the future.

What if we started designing wallets to consolidate unspent outputs? When
selecting unspent outputs for a transaction, rather than choosing just the
minimum number from a particular address, why not select them ALL? Take all
of the UTXOs from a particular address or wallet, send however much needs
to be spent to the payee, and send the rest back to the same address or a
change address as a single output? Through this method, we should wind up
shrinking the UTXO database over time rather than growing it with each
transaction. Obviously, as Bitcoin gains wider adoption, the UTXO database
will grow, simply because there are 7 billion people in the world, and
eventually a good percentage of them will have one or more wallets with
spendable bitcoin. But this idea could limit the growth at least.

The vast majority of users are running one of a handful of different wallet
apps: Core, Electrum; Armory; Mycelium; Breadwallet; Coinbase; Circle;
Blockchain.info; and maybe a few others. The developers of all these
wallets have a vested interest in the continued usefulness of Bitcoin, and
so should not be opposed to changing their UTXO selection algorithms to one
that reduces the UTXO database instead of growing it.

From the miners perspective, even though these types of transactions would
be larger, the fee could stay low. Miners actually benefit from them in
that it reduces the amount of storage they need to dedicate to holding the
UTXO. So miners are incentivized to mine these types of transactions with a
higher priority despite a low fee.

Relays could also get in on the action and enforce this type of behavior by
refusing to relay or deprioritizing the relay of transactions that don't
use all of the available UTXOs from the addresses used as inputs. Relays
are not only the ones who benefit the most from a reduction of the UTXO
database, they're also in the best position to promote good behavior.

--
*James G. Phillips IV*
<https://plus.google.com/u/0/113107039501292625391/posts>

*"Don't bunt. Aim out of the ball park. Aim for the company of immortals."
-- David Ogilvy*

 *This message was created with 100% recycled electrons. Please think twice
before printing.*

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 permalink raw reply	[|nested]
2015-05-09 17:09 Jim Phillips

  2015-05-09 19:02   ` Jim Phillips
  2015-05-09 19:00 ` Andreas Schildbach
                   ` (5 subsequent siblings)
  
From: Peter Todd @ 2015-05-09 18:45 UTC (permalink / raw)
  To: Jim Phillips;  bitcoin-development

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On Sat, May 09, 2015 at 12:09:32PM -0500, Jim Phillips wrote:
> The vast majority of users are running one of a handful of different wallet
> apps: Core, Electrum; Armory; Mycelium; Breadwallet; Coinbase; Circle;
> Blockchain.info; and maybe a few others. The developers of all these
> wallets have a vested interest in the continued usefulness of Bitcoin, and
> so should not be opposed to changing their UTXO selection algorithms to one
> that reduces the UTXO database instead of growing it.

You can't assume that UTXO growth will be driven by walles at all; the
UTXO set's global consensus functionality is incredibly useful and will
certainly be used by all manner of applications, many having nothing to
do with Bitcoin.

As one of many examples, here's a proposal - with working code - to use
the UTXO set to get consensus over TLC certificate revocations. The
author, Christopher Allen, was one of the co-authors of the SSL
standard:

https://github.com/ChristopherA/revocable-self-signed-tls-certificates-hack

There's nothing we can do to stop these kinds of usages other than
forcing users to identify themselves to get permission to use the
Bitcoin blockchain. Using the Bitcoin blockchain gives their users
significantly better security in many cases than any alternatives, so
there's strong incentives to do so. Finally, the cost many of these
alternative uses are willing to pay pre UTXO/transaction is
significantly higher than the fees many existing Bitcoin users can pay
to make transactions.

-- 
'peter'[:-1]@petertodd.org
00000000000000000e7980aab9c096c46e7f34c43a661c5cb2ea71525ebb8af7

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 permalink raw reply	[|nested]
2015-05-09 17:09 Jim Phillips
  2015-05-09 18:45 ` Peter Todd

  2015-05-09 19:05   ` Jim Phillips
  2015-05-09 19:06   ` Pieter Wuille
       [not found] ` <3862E01F-FD0F-48F5-A6D9-F8E0FB0AB68F@newcastle.ac.uk>
                   ` (4 subsequent siblings)
  
From: Andreas Schildbach @ 2015-05-09 19:00 UTC (permalink / raw)
  To: bitcoin-development

Actually your assumption is wrong. Bitcoin Wallet (and I think most, if
not all, other bitcoinj based wallets) picks UTXO by age, in order to
maximize priority. So it keeps the number of UTXOs low, though not as
low as if it would always pick *all* UTXOs.


On 05/09/2015 07:09 PM, Jim Phillips wrote:
> Forgive me if this idea has been suggested before, but I made this
> suggestion on reddit and I got some feedback recommending I also bring
> it to this list -- so here goes.
> 
> I wonder if there isn't perhaps a simpler way of dealing with UTXO
> growth. What if, rather than deal with the issue at the protocol level,
> we deal with it at the source of the problem -- the wallets. Right now,
> the typical wallet selects only the minimum number of unspent outputs
> when building a transaction. The goal is to keep the transaction size to
> a minimum so that the fee stays low. Consequently, lots of unspent
> outputs just don't get used, and are left lying around until some point
> in the future.
> 
> What if we started designing wallets to consolidate unspent outputs?
> When selecting unspent outputs for a transaction, rather than choosing
> just the minimum number from a particular address, why not select them
> ALL? Take all of the UTXOs from a particular address or wallet, send
> however much needs to be spent to the payee, and send the rest back to
> the same address or a change address as a single output? Through this
> method, we should wind up shrinking the UTXO database over time rather
> than growing it with each transaction. Obviously, as Bitcoin gains wider
> adoption, the UTXO database will grow, simply because there are 7
> billion people in the world, and eventually a good percentage of them
> will have one or more wallets with spendable bitcoin. But this idea
> could limit the growth at least.
> 
> The vast majority of users are running one of a handful of different
> wallet apps: Core, Electrum; Armory; Mycelium; Breadwallet; Coinbase;
> Circle; Blockchain.info; and maybe a few others. The developers of all
> these wallets have a vested interest in the continued usefulness of
> Bitcoin, and so should not be opposed to changing their UTXO selection
> algorithms to one that reduces the UTXO database instead of growing it.
> 
> From the miners perspective, even though these types of transactions
> would be larger, the fee could stay low. Miners actually benefit from
> them in that it reduces the amount of storage they need to dedicate to
> holding the UTXO. So miners are incentivized to mine these types of
> transactions with a higher priority despite a low fee.
> 
> Relays could also get in on the action and enforce this type of behavior
> by refusing to relay or deprioritizing the relay of transactions that
> don't use all of the available UTXOs from the addresses used as inputs.
> Relays are not only the ones who benefit the most from a reduction of
> the UTXO database, they're also in the best position to promote good
> behavior.
> 
> --
> *James G. Phillips
> IV* <https://plus.google.com/u/0/113107039501292625391/posts> 
> /"Don't bunt. Aim out of the ball park. Aim for the company of
> immortals." -- David Ogilvy
> /
> 
>  /This message was created with 100% recycled electrons. Please think
> twice before printing./
> 
> 
> ------------------------------------------------------------------------------
> One dashboard for servers and applications across Physical-Virtual-Cloud 
> Widest out-of-the-box monitoring support with 50+ applications
> Performance metrics, stats and reports that give you Actionable Insights
> Deep dive visibility with transaction tracing using APM Insight.
> http://ad.doubleclick.net/ddm/clk/290420510;117567292;y
> 
> 
> 
> _______________________________________________
> Bitcoin-development mailing list
> Bitcoin-development@lists•sourceforge.net
> https://lists.sourceforge.net/lists/listinfo/bitcoin-development
> 





 permalink raw reply	[|nested]
2015-05-09 18:45 ` Peter Todd

  
From: Jim Phillips @ 2015-05-09 19:02 UTC (permalink / raw)
  To: Peter Todd;  bitcoin-development

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On Sat, May 9, 2015 at 1:45 PM, Peter Todd <pete@petertodd•org> wrote:

> On Sat, May 09, 2015 at 12:09:32PM -0500, Jim Phillips wrote:
> > The vast majority of users are running one of a handful of different
> wallet
> > apps: Core, Electrum; Armory; Mycelium; Breadwallet; Coinbase; Circle;
> > Blockchain.info; and maybe a few others. The developers of all these
> > wallets have a vested interest in the continued usefulness of Bitcoin,
> and
> > so should not be opposed to changing their UTXO selection algorithms to
> one
> > that reduces the UTXO database instead of growing it.
>
> You can't assume that UTXO growth will be driven by walles at all; the
> UTXO set's global consensus functionality is incredibly useful and will
> certainly be used by all manner of applications, many having nothing to
> do with Bitcoin.
>

You're correct in this point. Future UTXO growth will be coming from all
directions. But I'm a believer in the idea that whatever can be done should
be done.  If we get Bitcoin devs into the mindset now that UTXOs are
expensive to those that have to store them, and that they should be good
netizens and do what they can to limit them, then hopefully that will ideal
will be passed down to future developers. I don't believe consolidating
UTXOs in the wallet is the only solution.. I just think it is a fairly easy
one to implement, and can only help the problem from getting worse in the
future.

--
*James G. Phillips IV*
<https://plus.google.com/u/0/113107039501292625391/posts>
<http://www.linkedin.com/in/ergophobe>

*"Don't bunt. Aim out of the ball park. Aim for the company of immortals."
-- David Ogilvy*

 *This message was created with 100% recycled electrons. Please think twice
before printing.*

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 permalink raw reply	[|nested]
2015-05-09 19:00 ` Andreas Schildbach

  2015-05-09 19:06   ` Pieter Wuille
  
From: Jim Phillips @ 2015-05-09 19:05 UTC (permalink / raw)
  To: Andreas Schildbach;  bitcoin-development

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On Sat, May 9, 2015 at 2:00 PM, Andreas Schildbach <andreas@schildbach•de>
wrote:

> Actually your assumption is wrong. Bitcoin Wallet (and I think most, if
> not all, other bitcoinj based wallets) picks UTXO by age, in order to
> maximize priority. So it keeps the number of UTXOs low, though not as
> low as if it would always pick *all* UTXOs.
>
> Is it not fair to say though that UTXO database growth is not considered
when selecting the UTXOs to use? And that size of transaction is a priority
if not the top priority?

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 permalink raw reply	[|nested]
2015-05-09 19:00 ` Andreas Schildbach
  2015-05-09 19:05   ` Jim Phillips

  2015-05-09 19:16     ` Jim Phillips
  
From: Pieter Wuille @ 2015-05-09 19:06 UTC (permalink / raw)
  To: Andreas Schildbach;  Bitcoin Dev

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It's a very complex trade-off, which is hard to optimize for all use cases.
Using more UTXOs requires larger transactions, and thus more fees in
general. In addition, it results in more linkage between coins/addresses
used, so lower privacy.

The only way you can guarantee an economical reason to keep the UTXO set
small is by actually having a consensus rule that punishes increasing its
size.
On May 9, 2015 12:02 PM, "Andreas Schildbach" <andreas@schildbach•de> wrote:

> Actually your assumption is wrong. Bitcoin Wallet (and I think most, if
> not all, other bitcoinj based wallets) picks UTXO by age, in order to
> maximize priority. So it keeps the number of UTXOs low, though not as
> low as if it would always pick *all* UTXOs.
>
>
> On 05/09/2015 07:09 PM, Jim Phillips wrote:
> > Forgive me if this idea has been suggested before, but I made this
> > suggestion on reddit and I got some feedback recommending I also bring
> > it to this list -- so here goes.
> >
> > I wonder if there isn't perhaps a simpler way of dealing with UTXO
> > growth. What if, rather than deal with the issue at the protocol level,
> > we deal with it at the source of the problem -- the wallets. Right now,
> > the typical wallet selects only the minimum number of unspent outputs
> > when building a transaction. The goal is to keep the transaction size to
> > a minimum so that the fee stays low. Consequently, lots of unspent
> > outputs just don't get used, and are left lying around until some point
> > in the future.
> >
> > What if we started designing wallets to consolidate unspent outputs?
> > When selecting unspent outputs for a transaction, rather than choosing
> > just the minimum number from a particular address, why not select them
> > ALL? Take all of the UTXOs from a particular address or wallet, send
> > however much needs to be spent to the payee, and send the rest back to
> > the same address or a change address as a single output? Through this
> > method, we should wind up shrinking the UTXO database over time rather
> > than growing it with each transaction. Obviously, as Bitcoin gains wider
> > adoption, the UTXO database will grow, simply because there are 7
> > billion people in the world, and eventually a good percentage of them
> > will have one or more wallets with spendable bitcoin. But this idea
> > could limit the growth at least.
> >
> > The vast majority of users are running one of a handful of different
> > wallet apps: Core, Electrum; Armory; Mycelium; Breadwallet; Coinbase;
> > Circle; Blockchain.info; and maybe a few others. The developers of all
> > these wallets have a vested interest in the continued usefulness of
> > Bitcoin, and so should not be opposed to changing their UTXO selection
> > algorithms to one that reduces the UTXO database instead of growing it.
> >
> > From the miners perspective, even though these types of transactions
> > would be larger, the fee could stay low. Miners actually benefit from
> > them in that it reduces the amount of storage they need to dedicate to
> > holding the UTXO. So miners are incentivized to mine these types of
> > transactions with a higher priority despite a low fee.
> >
> > Relays could also get in on the action and enforce this type of behavior
> > by refusing to relay or deprioritizing the relay of transactions that
> > don't use all of the available UTXOs from the addresses used as inputs.
> > Relays are not only the ones who benefit the most from a reduction of
> > the UTXO database, they're also in the best position to promote good
> > behavior.
> >
> > --
> > *James G. Phillips
> > IV* <https://plus.google.com/u/0/113107039501292625391/posts>
> > /"Don't bunt. Aim out of the ball park. Aim for the company of
> > immortals." -- David Ogilvy
> > /
> >
> >  /This message was created with 100% recycled electrons. Please think
> > twice before printing./
> >
> >
> >
> ------------------------------------------------------------------------------
> > One dashboard for servers and applications across Physical-Virtual-Cloud
> > Widest out-of-the-box monitoring support with 50+ applications
> > Performance metrics, stats and reports that give you Actionable Insights
> > Deep dive visibility with transaction tracing using APM Insight.
> > http://ad.doubleclick.net/ddm/clk/290420510;117567292;y
> >
> >
> >
> > _______________________________________________
> > Bitcoin-development mailing list
> > Bitcoin-development@lists•sourceforge.net
> > https://lists.sourceforge.net/lists/listinfo/bitcoin-development
> >
>
>
>
>
> ------------------------------------------------------------------------------
> One dashboard for servers and applications across Physical-Virtual-Cloud
> Widest out-of-the-box monitoring support with 50+ applications
> Performance metrics, stats and reports that give you Actionable Insights
> Deep dive visibility with transaction tracing using APM Insight.
> http://ad.doubleclick.net/ddm/clk/290420510;117567292;y
> _______________________________________________
> Bitcoin-development mailing list
> Bitcoin-development@lists•sourceforge.net
> https://lists.sourceforge.net/lists/listinfo/bitcoin-development
>

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2015-05-09 19:06   ` Pieter Wuille

  2015-05-09 19:43       ` Ross Nicoll
  
From: Jim Phillips @ 2015-05-09 19:16 UTC (permalink / raw)
  To: Pieter Wuille;  Bitcoin Dev, Andreas Schildbach

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On Sat, May 9, 2015 at 2:06 PM, Pieter Wuille <pieter.wuille@gmail•com>
wrote:

> It's a very complex trade-off, which is hard to optimize for all use
> cases. Using more UTXOs requires larger transactions, and thus more fees in
> general.
>
Unless the miner determines that the reduction in UTXO storage requirements
is worth the lower fee. There's no protocol level enforcement of a fee as
far as I understand it. It's enforced by the miners and their willingness
to include a transaction in a block.

> In addition, it results in more linkage between coins/addresses used, so
> lower privacy.
>
Not if you only select all the UTXOs from a single address. A wallet that
is geared more towards privacy minded individuals may want to reduce the
amount of address linkage, but a wallet geared towards the general masses
probably won't have to worry so much about that.

> The only way you can guarantee an economical reason to keep the UTXO set
> small is by actually having a consensus rule that punishes increasing its
> size.
>
There's an economical reason right now to keeping the UTXO set small. The
smaller it is, the easier it is for the individual to run a full node. The
easier it is to run a full node, the faster Bitcoin will spread to the
masses. The faster it spreads to the masses, the more valuable it becomes.

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 permalink raw reply	[|nested]
2015-05-09 19:33 ` Jim Phillips
  
From: Raystonn @ 2015-05-09 19:25 UTC (permalink / raw)
  To: Jim Phillips;  Bitcoin Dev, Andreas, Schildbach

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 permalink raw reply	[|nested]
[not found]     ` <8029969D-FD22-43F7-930D-CEC7A87CEAD5@newcastle.ac.uk>

  
From: Jim Phillips @ 2015-05-09 19:28 UTC (permalink / raw)
  To: Patrick Mccorry (PGR), bitcoin-development

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On Sat, May 9, 2015 at 2:12 PM, Patrick Mccorry (PGR) <
patrick.mccorry@newcastle•ac.uk> wrote:

>   Not necessarily. If you want to ensure privacy, you could limit the
> selection of UTXOs to a single address, and even go so far as to send
> change back to that same address. This wouldn't be as effective as
> combining the UTXOs from multiple addresses, but it would help. The key is
> to do everything that can be done when building a transaction to ensure
> that as many inputs as possible are consolidated into as few outputs as
> possible.
>
>
>  I would agree if you have multiple utxo for a single address then it
> makes sense since there is no privacy loss. However sending the change back
> to the same address would damage privacy (Hive does this) as it is then
> obvious from looking at the transaction which output is change and which
> output is sending funds.
>

I tend to agree with you here. But the change output could just as easily
be sent to a new change address.

>  Also not everyone is concerned with their own privacy, and I'm not aware
> of any HD-wallet implementations that won't already combine inputs from
> multiple addresses within that wallet without user input.
>
>
>  For people who do not care for privacy then it would work fine. But
> adding it into the wallet as default behaviour would deter those who do
> care for privacy - and making it a customisable option just adds complexity
> for the users. Wallets do need to combine utxo at times to spend bitcoins
> which is how people can be tracked today, using the minimum set of utxo
> tries to reduce the risk.
>
> Different wallets are targeted at different demographics. Some are geared
towards more mainstream users (for whom the privacy issue is less a
concern) and some (such as DarkWallet) are geared more towards the privacy
advocates. These wallets may choose to set their defaults at oposite ends
of the spectrum as to how they choose to select and link addresses and
UTXOs, but they can all improve on their current algorithms and promote
some degree of consolidation.

>   Additionally, large wallets that have lots of addresses owned by
> multiple users like exchanges, blockchain.info, and Coinbase can
> consolidate UTXOs very effectively when building transactions
>
>
>  That's true - I'm not sure how they would feel about it though. I
> imagine they probably are already to minimise key management.
>
> That's what these discussions are for. Hopefully this thread will be seen
by developers of these wallets and give them something to consider.

>

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 permalink raw reply	[|nested]
2015-05-09 19:25 Raystonn

  
From: Jim Phillips @ 2015-05-09 19:33 UTC (permalink / raw)
  To: Raystonn;  Bitcoin Dev, Andreas Schildbach

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On Sat, May 9, 2015 at 2:25 PM, Raystonn <raystonn@hotmail•com> wrote:

> Lack of privacy is viral.  We shouldn't encourage policy in most wallets
> that discourages privacy.  It adversely affects privacy across the entire
> network.
>
How about this as a happy medium default policy: Rather than select UTXOs
based solely on age and limiting the size of the transaction, we select as
many UTXOs as possible from as few addresses as possible, prioritizing
which addresses to use based on the number of UTXOs it contains (more being
preferable) and how old those UTXOs are (in order to reduce the fee)?

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 permalink raw reply	[|nested]
2015-05-09 19:52 ` Jim Phillips
  
From: Raystonn @ 2015-05-09 19:43 UTC (permalink / raw)
  To: Jim Phillips;  Bitcoin Dev, Andreas, Schildbach

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 permalink raw reply	[|nested]
2015-05-09 19:16     ` Jim Phillips

  
From: Ross Nicoll @ 2015-05-09 19:43 UTC (permalink / raw)
  To: Jim Phillips, Pieter Wuille;  Bitcoin Dev, Andreas Schildbach

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I think potential fee subsidies for cleaning up UTXO (and/or penalties 
for creating more UTXO than you burn) are worth thinking about. As 
Gavin's post ( gavinandresen.ninja/utxo-uhoh ) indicates, UTXO cost is 
far higher than block storage, so charging differently for the in/out 
mismatches should make good economic sense.

Ross


On 09/05/2015 20:16, Jim Phillips wrote:
> On Sat, May 9, 2015 at 2:06 PM, Pieter Wuille <pieter.wuille@gmail•com 
> <mailto:pieter.wuille@gmail•com>> wrote:
>
>     It's a very complex trade-off, which is hard to optimize for all
>     use cases. Using more UTXOs requires larger transactions, and thus
>     more fees in general.
>
> Unless the miner determines that the reduction in UTXO storage 
> requirements is worth the lower fee. There's no protocol level 
> enforcement of a fee as far as I understand it. It's enforced by the 
> miners and their willingness to include a transaction in a block.
>
>     In addition, it results in more linkage between coins/addresses
>     used, so lower privacy.
>
> Not if you only select all the UTXOs from a single address. A wallet 
> that is geared more towards privacy minded individuals may want to 
> reduce the amount of address linkage, but a wallet geared towards the 
> general masses probably won't have to worry so much about that.
>
>     The only way you can guarantee an economical reason to keep the
>     UTXO set small is by actually having a consensus rule that
>     punishes increasing its size.
>
> There's an economical reason right now to keeping the UTXO set small. 
> The smaller it is, the easier it is for the individual to run a full 
> node. The easier it is to run a full node, the faster Bitcoin will 
> spread to the masses. The faster it spreads to the masses, the more 
> valuable it becomes.
>
>
>
> ------------------------------------------------------------------------------
> One dashboard for servers and applications across Physical-Virtual-Cloud
> Widest out-of-the-box monitoring support with 50+ applications
> Performance metrics, stats and reports that give you Actionable Insights
> Deep dive visibility with transaction tracing using APM Insight.
> http://ad.doubleclick.net/ddm/clk/290420510;117567292;y
>
>
> _______________________________________________
> Bitcoin-development mailing list
> Bitcoin-development@lists•sourceforge.net
> https://lists.sourceforge.net/lists/listinfo/bitcoin-development


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 permalink raw reply	[|nested]
2015-05-09 19:43 Raystonn

  
From: Jim Phillips @ 2015-05-09 19:52 UTC (permalink / raw)
  To: Raystonn;  Bitcoin Dev, Andreas Schildbach

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On Sat, May 9, 2015 at 2:43 PM, Raystonn <raystonn@hotmail•com> wrote:

> How about this as a happy medium default policy: Rather than select UTXOs
>> based solely on age and limiting the size of the transaction, we select as
>> many UTXOs as possible from as few addresses as possible, prioritizing
>> which addresses to use based on the number of UTXOs it contains (more being
>> preferable) and how old those UTXOs are (in order to reduce the fee)?
>
> If selecting older UTXOs gives higher priority for a lesser (or at least
> not greater) fee, that is an incentive for a rational user to use the older
> UTXOs.  Such policy needs to be defended or removed.  It doesn't support
> privacy or a reduction in UTXOs.
>
Before starting this thread, I had completely forgotten that age was even a
factor in determining which UTXOs to use. Frankly, I can't think of any
reason why miners care how old a particular UTXO is when determining what
fees to charge. I'm sure there is one, I just don't know what it is. I just
tossed it in there as homage to Andreas who pointed out to me that it was
still part of the selection criteria.

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 permalink raw reply	[|nested]
2015-05-09 20:38 ` Pieter Wuille
  
From: Raystonn @ 2015-05-09 20:20 UTC (permalink / raw)
  To: Jim Phillips;  Bitcoin Dev, Andreas, Schildbach

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2015-05-09 20:20 [Bitcoin-development] A suggestion for reducing the size of the UTXO database Raystonn

  2015-05-09 21:11   ` Jim Phillips
  
From: Pieter Wuille @ 2015-05-09 20:38 UTC (permalink / raw)
  To: Raystonn;  Bitcoin Dev, Andreas Schildbach

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Miners do not care about the age of a UTXO entry, apart for two exceptions.
It is also economically irrelevant.
* There is a free transaction policy, which sets a small portion of block
space aside for transactions which do not pay sufficient fee. This is
mostly an altruistic way of encouraging Bitcoin adoption. As a DoS
prevention mechanism, there is a requirement that these free transactions
are of sufficient priority (computed as BTC-days-destroyed per byte),
essentially requiring these transactions to consume another scarce
resource, even if not money.
* Coinbase transaction outputs can, as a consensus rule, only be spent
after 100 confirmations. This is to prevent random reorganisations from
invalidating transactions that spend young coinbase transactions (which
can't move to the new chain). In addition, wallets also select more
confirmed outputs first to consume, for the same reason.
On May 9, 2015 1:20 PM, "Raystonn" <raystonn@hotmail•com> wrote:

> That policy is included in Bitcoin Core.  Miners use it because it is the
> default.  The policy was likely intended to help real transactions get
> through in the face of spam.  But it favors those with more bitcoin, as the
> priority is determined by amount spent multiplied by age of UTXOs.  At the
> very least the amount spent should be removed as a factor, or fees are
> unlikely to ever be paid by those who can afford them.  We can reassess the
> role age plays later.  One change at a time is better.
>  On 9 May 2015 12:52 pm, Jim Phillips <jim@ergophobia•org> wrote:
>
> On Sat, May 9, 2015 at 2:43 PM, Raystonn <raystonn@hotmail•com> wrote:
>
> How about this as a happy medium default policy: Rather than select UTXOs
> based solely on age and limiting the size of the transaction, we select as
> many UTXOs as possible from as few addresses as possible, prioritizing
> which addresses to use based on the number of UTXOs it contains (more being
> preferable) and how old those UTXOs are (in order to reduce the fee)?
>
> If selecting older UTXOs gives higher priority for a lesser (or at least
> not greater) fee, that is an incentive for a rational user to use the older
> UTXOs.  Such policy needs to be defended or removed.  It doesn't support
> privacy or a reduction in UTXOs.
>
> Before starting this thread, I had completely forgotten that age was even
> a factor in determining which UTXOs to use. Frankly, I can't think of any
> reason why miners care how old a particular UTXO is when determining what
> fees to charge. I'm sure there is one, I just don't know what it is. I just
> tossed it in there as homage to Andreas who pointed out to me that it was
> still part of the selection criteria.
>
>

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2015-05-09 20:38 ` Pieter Wuille

  
From: Jim Phillips @ 2015-05-09 21:11 UTC ( / )
  To: Pieter Wuille;  Andreas Schildbach, Bitcoin Dev



Makes sense.. So with that said, I'd propose the following criteria for
selecting UTXOs:

1. Select the smallest possible set of addresses that can be linked in
order to come up with enough BTC to send to the payee.
2. Given multiple possible sets, select the one that has the largest number
of UTXOs.
3. Given multiple possible sets, choose the one that contains the largest
amount of total BTC.
4. Given multiple possible sets, select the one that destroys the most
bitcoin days.
5. If there's still multiple possible sets, just choose one at random.

Once the final set of addresses has been identified, use ALL UTXOs from
that set, sending appropriate outputs to the recipient(s), a new change
address, and a mining fee.

Miners should be cognisant of and reward the fact that the user is making
an effort to consolidate UTXOs. They can easily spot these transactions by
looking at whether all possible UTXOs from each input addresses have been
used. Since most miners use Bitcoin Core, and its defaults, this test can
be built into Bitcoin Core's logic for determining which transactions to
include when mining a block.

--
*James G. Phillips IV*
<https://plus.google.com/u/0/113107039501292625391/posts>
<http://www.linkedin.com/in/ergophobe>

*"Don't bunt. Aim out of the ball park. Aim for the company of immortals."
-- David Ogilvy*

 *This message was created with 100% recycled electrons. Please think twice
before printing.*

On Sat, May 9, 2015 at 3:38 PM, Pieter Wuille <pieter.wuille@gmail•com>
wrote:

> Miners do not care about the age of a UTXO entry, apart for two
> exceptions. It is also economically irrelevant.
> * There is a free transaction policy, which sets a small portion of block
> space aside for transactions which do not pay sufficient fee. This is
> mostly an altruistic way of encouraging Bitcoin adoption. As a DoS
> prevention mechanism, there is a requirement that these free transactions
> are of sufficient priority (computed as BTC-days-destroyed per byte),
> essentially requiring these transactions to consume another scarce
> resource, even if not money.
> * Coinbase transaction outputs can, as a consensus rule, only be spent
> after 100 confirmations. This is to prevent random reorganisations from
> invalidating transactions that spend young coinbase transactions (which
> can't move to the new chain). In addition, wallets also select more
> confirmed outputs first to consume, for the same reason.
> On May 9, 2015 1:20 PM, "Raystonn" <raystonn@hotmail•com> wrote:
>
>> That policy is included in Bitcoin Core.  Miners use it because it is the
>> default.  The policy was likely intended to help real transactions get
>> through in the face of spam.  But it favors those with more bitcoin, as the
>> priority is determined by amount spent multiplied by age of UTXOs.  At the
>> very least the amount spent should be removed as a factor, or fees are
>> unlikely to ever be paid by those who can afford them.  We can reassess the
>> role age plays later.  One change at a time is better.
>>  On 9 May 2015 12:52 pm, Jim Phillips <jim@ergophobia•org> wrote:
>>
>> On Sat, May 9, 2015 at 2:43 PM, Raystonn <raystonn@hotmail•com> wrote:
>>
>> How about this as a happy medium default policy: Rather than select UTXOs
>> based solely on age and limiting the size of the transaction, we select as
>> many UTXOs as possible from as few addresses as possible, prioritizing
>> which addresses to use based on the number of UTXOs it contains (more being
>> preferable) and how old those UTXOs are (in order to reduce the fee)?
>>
>> If selecting older UTXOs gives higher priority for a lesser (or at least
>> not greater) fee, that is an incentive for a rational user to use the older
>> UTXOs.  Such policy needs to be defended or removed.  It doesn't support
>> privacy or a reduction in UTXOs.
>>
>> Before starting this thread, I had completely forgotten that age was even
>> a factor in determining which UTXOs to use. Frankly, I can't think of any
>> reason why miners care how old a particular UTXO is when determining what
>> fees to charge. I'm sure there is one, I just don't know what it is. I just
>> tossed it in there as homage to Andreas who pointed out to me that it was
>> still part of the selection criteria.
>>
>>
* 
  2015-05-09 17:09 Jim Phillips
                   ` 
  2015-05-10  2:11 ` 

  2015-05-10 14:33   ` Jeff Garzik
  2015-05-12 19:50 ` Danny Thorpe
  2015-05-25 18:44 ` Mike Hearn
  6 siblings, 1 reply; 32+ messages in thread
From: Bob McElrath @ 2015-05-10 13:35 UTC (permalink / raw)
  To: bitcoin-development


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This is my biggest headache with practical bitcoin usage. I'd love to hear it if
anyone has any clever solutions to the wallet/utxo locked problem. Spending
unconfirmed outputs really requires a different security model on the part of
the receiver than #confirmations, but isn't inherently bad if the receiver has a
better security model and knows how to compute the probability that an
unconfirmed-spend will get confirmed. Of course the bigger problem is wallet
software that refuses to spend unconfirmed outputs.

I've thought a bit about a fork/merge design: if the change were computed by the
network instead of the submitter, two transactions having the same change
address and a common input could be straightforwardly merged or split (in a
reorg), where with bitcoin currently it would be considered a double-spend.  Of
course that has big privacy implications since it directly exposes the change
address, and is a hard fork, but is much closer to what people expect of a
debit-based "account" in traditional banking.

The fact of the matter is that having numerous sequential debits on an account
is an extremely common use case, and bitcoin is obtuse in this respect.

On May 9, 2015 1:09:32 PM EDT, Jim Phillips <jim@ergophobia•org> wrote:
>Forgive me if this idea has been suggested before, but I made this
>suggestion on reddit and I got some feedback recommending I also bring
>it
>to this list -- so here goes.
>
>I wonder if there isn't perhaps a simpler way of dealing with UTXO
>growth.
>What if, rather than deal with the issue at the protocol level, we deal
>with it at the source of the problem -- the wallets. Right now, the
>typical
>wallet selects only the minimum number of unspent outputs when building
>a
>transaction. The goal is to keep the transaction size to a minimum so
>that
>the fee stays low. Consequently, lots of unspent outputs just don't get
>used, and are left lying around until some point in the future.
>
>What if we started designing wallets to consolidate unspent outputs?
>When
>selecting unspent outputs for a transaction, rather than choosing just
>the
>minimum number from a particular address, why not select them ALL? Take
>all
>of the UTXOs from a particular address or wallet, send however much
>needs
>to be spent to the payee, and send the rest back to the same address or
>a
>change address as a single output? Through this method, we should wind
>up
>shrinking the UTXO database over time rather than growing it with each
>transaction. Obviously, as Bitcoin gains wider adoption, the UTXO
>database
>will grow, simply because there are 7 billion people in the world, and
>eventually a good percentage of them will have one or more wallets with
>spendable bitcoin. But this idea could limit the growth at least.
>
>The vast majority of users are running one of a handful of different
>wallet
>apps: Core, Electrum; Armory; Mycelium; Breadwallet; Coinbase; Circle;
>Blockchain.info; and maybe a few others. The developers of all these
>wallets have a vested interest in the continued usefulness of Bitcoin,
>and
>so should not be opposed to changing their UTXO selection algorithms to
>one
>that reduces the UTXO database instead of growing it.
>
>>From the miners perspective, even though these types of transactions
>would
>be larger, the fee could stay low. Miners actually benefit from them in
>that it reduces the amount of storage they need to dedicate to holding
>the
>UTXO. So miners are incentivized to mine these types of transactions
>with a
>higher priority despite a low fee.
>
>Relays could also get in on the action and enforce this type of
>behavior by
>refusing to relay or deprioritizing the relay of transactions that
>don't
>use all of the available UTXOs from the addresses used as inputs.
>Relays
>are not only the ones who benefit the most from a reduction of the UTXO
>database, they're also in the best position to promote good behavior.
>
>--
>*James G. Phillips IV*
><https://plus.google.com/u/0/113107039501292625391/posts>
>
>*"Don't bunt. Aim out of the ball park. Aim for the company of
>immortals."
>-- David Ogilvy*
>
>*This message was created with 100% recycled electrons. Please think
>twice
>before printing.*
>
>
>!DSPAM:554e4e5450787476022393!
>
>
>------------------------------------------------------------------------
>
>------------------------------------------------------------------------------
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>Physical-Virtual-Cloud 
>Widest out-of-the-box monitoring support with 50+ applications
>Performance metrics, stats and reports that give you Actionable
>Insights
>Deep dive visibility with transaction tracing using APM Insight.
>http://ad.doubleclick.net/ddm/clk/290420510;117567292;y
>
>!DSPAM:554e4e5450787476022393!
>
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>https://lists.sourceforge.net/lists/listinfo/bitcoin-development
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-- 
Sent from my Android device with K-9 Mail. Please excuse my brevity.

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^ permalink raw reply	[|nested] 32+ messages in thread
2015-05-10  2:11 ` Matt Whitlock

  2015-05-25 18:41   ` Mike Hearn
  
From: Jim Phillips @ 2015-05-10 12:11 UTC (permalink / raw)
  To: Matt Whitlock;  Bitcoin Dev

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I feel your pain. I've had the same thing happen to me in the past. And I
agree it's more likely to occur with my proposed scheme but I think with HD
wallets there will still be UTXOs left unspent after most transactions
since, for privacy sake it's looking for the smallest set of addresses that
can be linked.
On May 9, 2015 9:11 PM, "Matt Whitlock" <bip@mattwhitlock•name> wrote:

> Minimizing the number of UTXOs in a wallet is sometimes not in the best
> interests of the user. In fact, quite often I've wished for a configuration
> option like "Try to maintain _[number]_ UTXOs in the wallet." This is
> because I often want to make multiple spends from my wallet within one
> block, but spends of unconfirmed inputs are less reliable than spends of
> confirmed inputs, and some wallets (e.g., Andreas Schildbach's wallet)
> don't even allow it - you can only spend confirmed UTXOs. I can't tell you
> how aggravating it is to have to tell a friend, "Oh, oops, I can't pay you
> yet. I have to wait for the last transaction I did to confirm first." All
> the more aggravating because I know, if I have multiple UTXOs in my wallet,
> I can make multiple spends within the same block.
>
>
> On Saturday, 9 May 2015, at 12:09 pm, Jim Phillips wrote:
> > Forgive me if this idea has been suggested before, but I made this
> > suggestion on reddit and I got some feedback recommending I also bring it
> > to this list -- so here goes.
> >
> > I wonder if there isn't perhaps a simpler way of dealing with UTXO
> growth.
> > What if, rather than deal with the issue at the protocol level, we deal
> > with it at the source of the problem -- the wallets. Right now, the
> typical
> > wallet selects only the minimum number of unspent outputs when building a
> > transaction. The goal is to keep the transaction size to a minimum so
> that
> > the fee stays low. Consequently, lots of unspent outputs just don't get
> > used, and are left lying around until some point in the future.
> >
> > What if we started designing wallets to consolidate unspent outputs? When
> > selecting unspent outputs for a transaction, rather than choosing just
> the
> > minimum number from a particular address, why not select them ALL? Take
> all
> > of the UTXOs from a particular address or wallet, send however much needs
> > to be spent to the payee, and send the rest back to the same address or a
> > change address as a single output? Through this method, we should wind up
> > shrinking the UTXO database over time rather than growing it with each
> > transaction. Obviously, as Bitcoin gains wider adoption, the UTXO
> database
> > will grow, simply because there are 7 billion people in the world, and
> > eventually a good percentage of them will have one or more wallets with
> > spendable bitcoin. But this idea could limit the growth at least.
> >
> > The vast majority of users are running one of a handful of different
> wallet
> > apps: Core, Electrum; Armory; Mycelium; Breadwallet; Coinbase; Circle;
> > Blockchain.info; and maybe a few others. The developers of all these
> > wallets have a vested interest in the continued usefulness of Bitcoin,
> and
> > so should not be opposed to changing their UTXO selection algorithms to
> one
> > that reduces the UTXO database instead of growing it.
> >
> > >From the miners perspective, even though these types of transactions
> would
> > be larger, the fee could stay low. Miners actually benefit from them in
> > that it reduces the amount of storage they need to dedicate to holding
> the
> > UTXO. So miners are incentivized to mine these types of transactions
> with a
> > higher priority despite a low fee.
> >
> > Relays could also get in on the action and enforce this type of behavior
> by
> > refusing to relay or deprioritizing the relay of transactions that don't
> > use all of the available UTXOs from the addresses used as inputs. Relays
> > are not only the ones who benefit the most from a reduction of the UTXO
> > database, they're also in the best position to promote good behavior.
> >
> > --
> > *James G. Phillips IV*
> > <https://plus.google.com/u/0/113107039501292625391/posts>
> >
> > *"Don't bunt. Aim out of the ball park. Aim for the company of
> immortals."
> > -- David Ogilvy*
> >
> >  *This message was created with 100% recycled electrons. Please think
> twice
> > before printing.*
>

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 permalink raw reply	[|nested]
* 
  2015-05-09 17:09 Jim Phillips
                   ` 
  2015-05-10 13:35 ` 

  2015-05-25 18:44 ` Mike Hearn
  6 siblings, 0 replies; 32+ messages in thread
From: Danny Thorpe @ 2015-05-12 19:50 UTC (permalink / raw)
  To: Jim Phillips;  Bitcoin Dev

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Having thousands of utxos floating around for a single address is clearly a
bad thing - it creates a lot of memory load on bitcoin nodes.

However, having only one utxo for an address is also a bad thing, for
concurrent operations.

Having "several" utxos available to spend is good for parallelism, so that
2 or more tasks which are spending from the same address don't have to line
up single file waiting for one of the tasks to publish a tx first so that
the next task can spend the (unconfirmed) change output of the first.
Requiring/Forcing/Having a single output carry the entire balance of an
address does not work at scale. (Yes, this presumes that the tasks are
coordinated so that they don't attempt to spend the same outputs. Internal
coordination is solvable.)

In multiple replies, you push for having "all" utxos of an address spent in
one transaction.  Why all?  If the objective is to reduce the size of the
utxo pool, it would be sufficient simply to recommend that wallets and
other spenders consume more utxos than they create, on average.

I'm ok with "consume more utxos than you generate" as a good citizen / best
practices recommendation, but a requirement that all prior outputs must be
spent in one transaction seems excessive and impractical.

-Danny

On Sat, May 9, 2015 at 10:09 AM, Jim Phillips <jim@ergophobia•org> wrote:

> Forgive me if this idea has been suggested before, but I made this
> suggestion on reddit and I got some feedback recommending I also bring it
> to this list -- so here goes.
>
> I wonder if there isn't perhaps a simpler way of dealing with UTXO growth.
> What if, rather than deal with the issue at the protocol level, we deal
> with it at the source of the problem -- the wallets. Right now, the typical
> wallet selects only the minimum number of unspent outputs when building a
> transaction. The goal is to keep the transaction size to a minimum so that
> the fee stays low. Consequently, lots of unspent outputs just don't get
> used, and are left lying around until some point in the future.
>
> What if we started designing wallets to consolidate unspent outputs? When
> selecting unspent outputs for a transaction, rather than choosing just the
> minimum number from a particular address, why not select them ALL? Take all
> of the UTXOs from a particular address or wallet, send however much needs
> to be spent to the payee, and send the rest back to the same address or a
> change address as a single output? Through this method, we should wind up
> shrinking the UTXO database over time rather than growing it with each
> transaction. Obviously, as Bitcoin gains wider adoption, the UTXO database
> will grow, simply because there are 7 billion people in the world, and
> eventually a good percentage of them will have one or more wallets with
> spendable bitcoin. But this idea could limit the growth at least.
>
> The vast majority of users are running one of a handful of different
> wallet apps: Core, Electrum; Armory; Mycelium; Breadwallet; Coinbase;
> Circle; Blockchain.info; and maybe a few others. The developers of all
> these wallets have a vested interest in the continued usefulness of
> Bitcoin, and so should not be opposed to changing their UTXO selection
> algorithms to one that reduces the UTXO database instead of growing it.
>
> From the miners perspective, even though these types of transactions would
> be larger, the fee could stay low. Miners actually benefit from them in
> that it reduces the amount of storage they need to dedicate to holding the
> UTXO. So miners are incentivized to mine these types of transactions with a
> higher priority despite a low fee.
>
> Relays could also get in on the action and enforce this type of behavior
> by refusing to relay or deprioritizing the relay of transactions that don't
> use all of the available UTXOs from the addresses used as inputs. Relays
> are not only the ones who benefit the most from a reduction of the UTXO
> database, they're also in the best position to promote good behavior.
>
> --
> *James G. Phillips IV*
> <https://plus.google.com/u/0/113107039501292625391/posts>
>
> *"Don't bunt. Aim out of the ball park. Aim for the company of immortals."
> -- David Ogilvy*
>
>  *This message was created with 100% recycled electrons. Please think
> twice before printing.*
>
>
> ------------------------------------------------------------------------------
> One dashboard for servers and applications across Physical-Virtual-Cloud
> Widest out-of-the-box monitoring support with 50+ applications
> Performance metrics, stats and reports that give you Actionable Insights
> Deep dive visibility with transaction tracing using APM Insight.
> http://ad.doubleclick.net/ddm/clk/290420510;117567292;y
> _______________________________________________
> Bitcoin-development mailing list
> Bitcoin-development@lists•sourceforge.net
> https://lists.sourceforge.net/lists/listinfo/bitcoin-development
>
>

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^ permalink raw reply	[|nested] 32+ messages in thread
2015-05-10 13:35 ` Bob McElrath

  2015-05-10 14:42     ` Bob McElrath
  
From: Jeff Garzik @ 2015-05-10 14:33 UTC (permalink / raw)
  To: Bob McElrath, Jim Phillips;  Bitcoin Dev

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This has been frequently explored on IRC.

My general conclusion is "dollar bills" - pick highly common denominations
of bitcoins.  Aggregate to obtain these denominations, but do not aggregate
further.

This permits merge avoidance (privacy++), easy coinjoin where many hide in
the noise (privacy++), wallet dust de-fragmentation, while avoiding the
over-aggregation problem where you have consolidated down to one output.

Thus a wallet would have several consolidation targets.

Another strategy is simply doubling outputs.  Say you pay 0.1 BTC to
Starbucks.  Add another 0.1 BTC output to yourself, and a final change
output.  Who can say which output goes to Starbucks?

There are many iterations and trade-offs between fragmentation and privacy.









On Sun, May 10, 2015 at 9:35 AM, Bob McElrath <bob_bitcoin@mcelrath•org>
wrote:

> This is my biggest headache with practical bitcoin usage. I'd love to hear
> it if
> anyone has any clever solutions to the wallet/utxo locked problem. Spending
> unconfirmed outputs really requires a different security model on the part
> of
> the receiver than #confirmations, but isn't inherently bad if the receiver
> has a
> better security model and knows how to compute the probability that an
> unconfirmed-spend will get confirmed. Of course the bigger problem is
> wallet
> software that refuses to spend unconfirmed outputs.
>
> I've thought a bit about a fork/merge design: if the change were computed
> by the
> network instead of the submitter, two transactions having the same change
> address and a common input could be straightforwardly merged or split (in a
> reorg), where with bitcoin currently it would be considered a
> double-spend.  Of
> course that has big privacy implications since it directly exposes the
> change
> address, and is a hard fork, but is much closer to what people expect of a
> debit-based "account" in traditional banking.
>
> The fact of the matter is that having numerous sequential debits on an
> account
> is an extremely common use case, and bitcoin is obtuse in this respect.
>
> On May 9, 2015 1:09:32 PM EDT, Jim Phillips <jim@ergophobia•org> wrote:
> >Forgive me if this idea has been suggested before, but I made this
> >suggestion on reddit and I got some feedback recommending I also bring
> >it
> >to this list -- so here goes.
> >
> >I wonder if there isn't perhaps a simpler way of dealing with UTXO
> >growth.
> >What if, rather than deal with the issue at the protocol level, we deal
> >with it at the source of the problem -- the wallets. Right now, the
> >typical
> >wallet selects only the minimum number of unspent outputs when building
> >a
> >transaction. The goal is to keep the transaction size to a minimum so
> >that
> >the fee stays low. Consequently, lots of unspent outputs just don't get
> >used, and are left lying around until some point in the future.
> >
> >What if we started designing wallets to consolidate unspent outputs?
> >When
> >selecting unspent outputs for a transaction, rather than choosing just
> >the
> >minimum number from a particular address, why not select them ALL? Take
> >all
> >of the UTXOs from a particular address or wallet, send however much
> >needs
> >to be spent to the payee, and send the rest back to the same address or
> >a
> >change address as a single output? Through this method, we should wind
> >up
> >shrinking the UTXO database over time rather than growing it with each
> >transaction. Obviously, as Bitcoin gains wider adoption, the UTXO
> >database
> >will grow, simply because there are 7 billion people in the world, and
> >eventually a good percentage of them will have one or more wallets with
> >spendable bitcoin. But this idea could limit the growth at least.
> >
> >The vast majority of users are running one of a handful of different
> >wallet
> >apps: Core, Electrum; Armory; Mycelium; Breadwallet; Coinbase; Circle;
> >Blockchain.info; and maybe a few others. The developers of all these
> >wallets have a vested interest in the continued usefulness of Bitcoin,
> >and
> >so should not be opposed to changing their UTXO selection algorithms to
> >one
> >that reduces the UTXO database instead of growing it.
> >
> >>From the miners perspective, even though these types of transactions
> >would
> >be larger, the fee could stay low. Miners actually benefit from them in
> >that it reduces the amount of storage they need to dedicate to holding
> >the
> >UTXO. So miners are incentivized to mine these types of transactions
> >with a
> >higher priority despite a low fee.
> >
> >Relays could also get in on the action and enforce this type of
> >behavior by
> >refusing to relay or deprioritizing the relay of transactions that
> >don't
> >use all of the available UTXOs from the addresses used as inputs.
> >Relays
> >are not only the ones who benefit the most from a reduction of the UTXO
> >database, they're also in the best position to promote good behavior.
> >
> >--
> >*James G. Phillips IV*
> ><https://plus.google.com/u/0/113107039501292625391/posts>
> >
> >*"Don't bunt. Aim out of the ball park. Aim for the company of
> >immortals."
> >-- David Ogilvy*
> >
> >*This message was created with 100% recycled electrons. Please think
> >twice
> >before printing.*
> >
> >
> >!DSPAM:554e4e5450787476022393!
> >
> >
> >------------------------------------------------------------------------
> >
>
> >------------------------------------------------------------------------------
> >One dashboard for servers and applications across
> >Physical-Virtual-Cloud
> >Widest out-of-the-box monitoring support with 50+ applications
> >Performance metrics, stats and reports that give you Actionable
> >Insights
> >Deep dive visibility with transaction tracing using APM Insight.
> >http://ad.doubleclick.net/ddm/clk/290420510;117567292;y
> >
> >!DSPAM:554e4e5450787476022393!
> >
> >
> >------------------------------------------------------------------------
> >
> >_______________________________________________
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> >Bitcoin-development@lists•sourceforge.net
> >https://lists.sourceforge.net/lists/listinfo/bitcoin-development
> >
> >
> >!DSPAM:554e4e5450787476022393!
>
> --
> Sent from my Android device with K-9 Mail. Please excuse my brevity.
>
> This is my biggest headache with practical bitcoin usage. I'd love to hear
> it if anyone has any clever solutions to the wallet/utxo locked problem.
> Spending unconfirmed outputs really requires a different security model on
> the part of the receiver than #confirmations, but isn't inherently bad if
> the receiver has a better security model and knows how to compute the
> probability that an unconfirmed-spend will get confirmed. Of course the
> bigger problem is wallet software that refuses to spend unconfirmed outputs.
>
> I've thought a bit about a fork/merge design: if the change were computed
> by the network instead of the submitter, two transactions having the same
> change address could be straightforwardly merged or split (in a reorg). Of
> course that has big privacy implications and is pretty far from bitcoin's
> design, but is much closer to what people expect of a debit-based "account"
> in traditional banking.
>
> The fact of the matter is that having numerous sequential debits on an
> account is an extremely common use case, and bitcoin is obtuse in this
> respect.
>
> On May 9, 2015 1:09:32 PM EDT, Jim Phillips <jim@ergophobia•org> wrote:
>>
>> Forgive me if this idea has been suggested before, but I made this
>> suggestion on reddit and I got some feedback recommending I also bring it
>> to this list -- so here goes.
>>
>> I wonder if there isn't perhaps a simpler way of dealing with UTXO
>> growth. What if, rather than deal with the issue at the protocol level, we
>> deal with it at the source of the problem -- the wallets. Right now, the
>> typical wallet selects only the minimum number of unspent outputs when
>> building a transaction. The goal is to keep the transaction size to a
>> minimum so that the fee stays low. Consequently, lots of unspent outputs
>> just don't get used, and are left lying around until some point in the
>> future.
>>
>> What if we started designing wallets to consolidate unspent outputs? When
>> selecting unspent outputs for a transaction, rather than choosing just the
>> minimum number from a particular address, why not select them ALL? Take all
>> of the UTXOs from a particular address or wallet, send however much needs
>> to be spent to the payee, and send the rest back to the same address or a
>> change address as a single output? Through this method, we should wind up
>> shrinking the UTXO database over time rather than growing it with each
>> transaction. Obviously, as Bitcoin gains wider adoption, the UTXO database
>> will grow, simply because there are 7 billion people in the world, and
>> eventually a good percentage of them will have one or more wallets with
>> spendable bitcoin. But this idea could limit the growth at least.
>>
>> The vast majority of users are running one of a handful of different
>> wallet apps: Core, Electrum; Armory; Mycelium; Breadwallet; Coinbase;
>> Circle; Blockchain.info; and maybe a few others. The developers of all
>> these wallets have a vested interest in the continued usefulness of
>> Bitcoin, and so should not be opposed to changing their UTXO selection
>> algorithms to one that reduces the UTXO database instead of growing it.
>>
>> From the miners perspective, even though these types of transactions
>> would be larger, the fee could stay low. Miners actually benefit from them
>> in that it reduces the amount of storage they need to dedicate to holding
>> the UTXO. So miners are incentivized to mine these types of transactions
>> with a higher priority despite a low fee.
>>
>> Relays could also get in on the action and enforce this type of behavior
>> by refusing to relay or deprioritizing the relay of transactions that don't
>> use all of the available UTXOs from the addresses used as inputs. Relays
>> are not only the ones who benefit the most from a reduction of the UTXO
>> database, they're also in the best position to promote good behavior.
>>
>> --
>> *James G. Phillips IV*
>> <https://plus.google.com/u/0/113107039501292625391/posts>
>>
>> *"Don't bunt. Aim out of the ball park. Aim for the company of
>> immortals." -- David Ogilvy*
>>
>>  *This message was created with 100% recycled electrons. Please think
>> twice before printing.*
>>  !DSPAM:554e4e5450787476022393!
>>
>> ------------------------------
>>
>> One dashboard for servers and applications across Physical-Virtual-Cloud
>> Widest out-of-the-box monitoring support with 50+ applications
>> Performance metrics, stats and reports that give you Actionable Insights
>> Deep dive visibility with transaction tracing using APM Insight.
>> http://ad.doubleclick.net/ddm/clk/290420510;117567292;y
>>
>> !DSPAM:554e4e5450787476022393!
>>
>> ------------------------------
>>
>> Bitcoin-development mailing list
>> Bitcoin-development@lists•sourceforge.net
>> https://lists.sourceforge.net/lists/listinfo/bitcoin-development
>>
>>
>> !DSPAM:554e4e5450787476022393!
>>
>>
> --
> Sent from my Android device with K-9 Mail. Please excuse my brevity.
>
> -----BEGIN PGP SIGNATURE-----
> Version: GnuPG v1.4.10 (GNU/Linux)
>
> iEYEARECAAYFAlVPXp0ACgkQjwioWRGe9K1+2ACfViY0D2ksVFe29SwhxbtmNSC3
> TQAAnRoJLI9wW3DQRPqQ7PorKxelC2S2
> =Er51
> -----END PGP SIGNATURE-----
>
>
> ------------------------------------------------------------------------------
> One dashboard for servers and applications across Physical-Virtual-Cloud
> Widest out-of-the-box monitoring support with 50+ applications
> Performance metrics, stats and reports that give you Actionable Insights
> Deep dive visibility with transaction tracing using APM Insight.
> http://ad.doubleclick.net/ddm/clk/290420510;117567292;y
> _______________________________________________
> Bitcoin-development mailing list
> Bitcoin-development@lists•sourceforge.net
> https://lists.sourceforge.net/lists/listinfo/bitcoin-development
>
>


-- 
Jeff Garzik
Bitcoin core developer and open source evangelist
BitPay, Inc.      https://bitpay.com/

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 permalink raw reply	[|nested]
2015-05-10 14:33   ` Jeff Garzik

  
From: Bob McElrath @ 2015-05-10 14:42 UTC (permalink / raw)
  To: Bitcoin Dev

That's a lot of work, a lot of extra utxo's, and a lot of blockchain spam, just
so I can do a convoluted form of arithmetic on my balance.

If a tx contained an explicit miner fee and a change address, but did not
compute the change, letting the network compute it (and therefore merge
transactions spending the same utxo), could one add some form of ring signature
a la Dash to alleviate the worsened privacy implications?

Jeff Garzik [jgarzik@bitpay•com] wrote:
> This has been frequently explored on IRC.
> 
> My general conclusion is "dollar bills" - pick highly common denominations of
> bitcoins.  Aggregate to obtain these denominations, but do not aggregate
> further.
> 
> This permits merge avoidance (privacy++), easy coinjoin where many hide in the
> noise (privacy++), wallet dust de-fragmentation, while avoiding the
> over-aggregation problem where you have consolidated down to one output.
> 
> Thus a wallet would have several consolidation targets.
> 
> Another strategy is simply doubling outputs.  Say you pay 0.1 BTC to
> Starbucks.  Add another 0.1 BTC output to yourself, and a final change output. 
> Who can say which output goes to Starbucks?
> 
> There are many iterations and trade-offs between fragmentation and privacy.



--
Cheers, Bob McElrath

"The individual has always had to struggle to keep from being overwhelmed by
the tribe.  If you try it, you will be lonely often, and sometimes frightened.
But no price is too high to pay for the privilege of owning yourself." 
    -- Friedrich Nietzsche



 permalink raw reply	[|nested]
* 
  2015-05-09 17:09 Jim Phillips
                   ` 
  2015-05-12 19:50 ` 

  2015-05-25 21:26   ` Peter Todd
  6 siblings, 1 reply; 32+ messages in thread
From: Mike Hearn @ 2015-05-25 18:44 UTC (permalink / raw)
  To: Jim Phillips;  Bitcoin Dev

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Wallets are incentivised to do a better job with defragmentation already,
as if you have lots of tiny UTXOs then your fees end up being huge when
trying to make a payment.

The reason they largely don't is just one of manpower. Nobody is working on
it.

As a wallet developer myself, one way I'd like to see this issue be fixed
by making free transactions more reliable. Then wallets can submit free
transactions to the network to consolidate UTXOs together, e.g. at night
when the user is sleeping. They would then fit into whatever space is
available in the block during periods of low demand, like on Sunday.

If we don't do this then wallets won't automatically defragment, as we'd be
unable to explain to the user why their money is slowly leaking out of
their wallet without them doing anything. Trying to explain the existing
transaction fees is hard enough already ("I thought bitcoin doesn't have
banks" etc).

There is another way:  as the fee is based on a rounded 1kb calculation, if
you go into the next fee band adding some more outputs and making a bigger
change output becomes "free" for another output or two. But wallets don't
exploit this today.

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^ permalink raw reply	[|nested] 32+ messages in thread
2015-05-10  2:11 ` Matt Whitlock
  2015-05-10 12:11   ` Jim Phillips

  2015-05-25 20:03     ` Matt Whitlock
  
From: Mike Hearn @ 2015-05-25 18:41 UTC (permalink / raw)
  To: Matt Whitlock;  Bitcoin Dev

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>
> some wallets (e.g., Andreas Schildbach's wallet) don't even allow it - you
> can only spend confirmed UTXOs. I can't tell you how aggravating it is to
> have to tell a friend, "Oh, oops, I can't pay you yet. I have to wait for
> the last transaction I did to confirm first." All the more aggravating
> because I know, if I have multiple UTXOs in my wallet, I can make multiple
> spends within the same block.
>

Andreas' wallet hasn't done that for years. Are you repeating this from
some very old memory or do you actually see this issue in reality?

The only time you're forced to wait for confirmations is when you have an
unconfirmed inbound transaction, and thus the sender is unknown.

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 permalink raw reply	[|nested]
2015-05-09 17:09 Jim Phillips
                   ` 
  2015-05-12 19:50 ` 

  2015-05-25 21:26   ` Peter Todd
  
From: Mike Hearn @ 2015-05-25 18:44 UTC (permalink / raw)
  To: Jim Phillips;  Bitcoin Dev

[-- Attachment #1: Type: text/plain, Size: 1165 bytes --]

Wallets are incentivised to do a better job with defragmentation already,
as if you have lots of tiny UTXOs then your fees end up being huge when
trying to make a payment.

The reason they largely don't is just one of manpower. Nobody is working on
it.

As a wallet developer myself, one way I'd like to see this issue be fixed
by making free transactions more reliable. Then wallets can submit free
transactions to the network to consolidate UTXOs together, e.g. at night
when the user is sleeping. They would then fit into whatever space is
available in the block during periods of low demand, like on Sunday.

If we don't do this then wallets won't automatically defragment, as we'd be
unable to explain to the user why their money is slowly leaking out of
their wallet without them doing anything. Trying to explain the existing
transaction fees is hard enough already ("I thought bitcoin doesn't have
banks" etc).

There is another way:  as the fee is based on a rounded 1kb calculation, if
you go into the next fee band adding some more outputs and making a bigger
change output becomes "free" for another output or two. But wallets don't
exploit this today.

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 permalink raw reply	[|nested]
2015-05-25 18:41   ` Mike Hearn

  2015-05-25 20:29       ` Andreas Schildbach
  2015-05-25 21:12       ` Mike Hearn
  
From: Matt Whitlock @ 2015-05-25 20:03 UTC (permalink / raw)
  To: Mike Hearn;  Bitcoin Dev

On Monday, 25 May 2015, at 8:41 pm, Mike Hearn wrote:
> > some wallets (e.g., Andreas Schildbach's wallet) don't even allow it - you
> > can only spend confirmed UTXOs. I can't tell you how aggravating it is to
> > have to tell a friend, "Oh, oops, I can't pay you yet. I have to wait for
> > the last transaction I did to confirm first." All the more aggravating
> > because I know, if I have multiple UTXOs in my wallet, I can make multiple
> > spends within the same block.
> 
> Andreas' wallet hasn't done that for years. Are you repeating this from
> some very old memory or do you actually see this issue in reality?
> 
> The only time you're forced to wait for confirmations is when you have an
> unconfirmed inbound transaction, and thus the sender is unknown.

I see this behavior all the time. I am using the latest release, as far as I know. Version 4.30.

The same behavior occurs in the Testnet3 variant of the app. Go in there with an empty wallet and receive one payment and wait for it to confirm. Then send a payment and, before it confirms, try to send another one. The wallet won't let you send the second payment. It'll say something like, "You need x.xxxxxx more bitcoins to make this payment." But if you wait for your first payment to confirm, then you'll be able to make the second payment.

If it matters, I configure the app to connect only to my own trusted Bitcoin node, so I only ever have one active connection at most. I notice that outgoing payments never show as "Sent" until they appear in a block, presumably because the app never sees the transaction come in over any connection.



 permalink raw reply	[|nested]
2015-05-25 20:03     ` Matt Whitlock

  2015-05-25 21:05         ` Peter Todd
  2015-05-25 21:14         ` Warren Togami Jr.
  2015-05-25 21:12       ` Mike Hearn
  
From: Andreas Schildbach @ 2015-05-25 20:29 UTC (permalink / raw)
  To: bitcoin-development

On 05/25/2015 10:03 PM, Matt Whitlock wrote:
> On Monday, 25 May 2015, at 8:41 pm, Mike Hearn wrote:
>>> some wallets (e.g., Andreas Schildbach's wallet) don't even allow it - you
>>> can only spend confirmed UTXOs. I can't tell you how aggravating it is to
>>> have to tell a friend, "Oh, oops, I can't pay you yet. I have to wait for
>>> the last transaction I did to confirm first." All the more aggravating
>>> because I know, if I have multiple UTXOs in my wallet, I can make multiple
>>> spends within the same block.
>>
>> Andreas' wallet hasn't done that for years. Are you repeating this from
>> some very old memory or do you actually see this issue in reality?
>>
>> The only time you're forced to wait for confirmations is when you have an
>> unconfirmed inbound transaction, and thus the sender is unknown.
> 
> I see this behavior all the time. I am using the latest release, as far as I know. Version 4.30.
> 
> The same behavior occurs in the Testnet3 variant of the app. Go in there with an empty wallet and receive one payment and wait for it to confirm. Then send a payment and, before it confirms, try to send another one. The wallet won't let you send the second payment. It'll say something like, "You need x.xxxxxx more bitcoins to make this payment." But if you wait for your first payment to confirm, then you'll be able to make the second payment.
> 
> If it matters, I configure the app to connect only to my own trusted Bitcoin node, so I only ever have one active connection at most. I notice that outgoing payments never show as "Sent" until they appear in a block, presumably because the app never sees the transaction come in over any connection.

Yes, that's the issue. Because you're connecting only to one node, you
don't get any instant confirmations -- due to a Bitcoin protocol
limitation you can only get them from nodes you don't post the tx to.






 permalink raw reply	[|nested]
2015-05-25 20:29       ` Andreas Schildbach

  2015-05-26 12:40           ` Andreas Schildbach
  2015-05-25 21:14         ` Warren Togami Jr.
  
From: Peter Todd @ 2015-05-25 21:05 UTC (permalink / raw)
  To: Andreas Schildbach;  bitcoin-development

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On Mon, May 25, 2015 at 10:29:26PM +0200, Andreas Schildbach wrote:
> > I see this behavior all the time. I am using the latest release, as far as I know. Version 4.30.
> > 
> > The same behavior occurs in the Testnet3 variant of the app. Go in there with an empty wallet and receive one payment and wait for it to confirm. Then send a payment and, before it confirms, try to send another one. The wallet won't let you send the second payment. It'll say something like, "You need x.xxxxxx more bitcoins to make this payment." But if you wait for your first payment to confirm, then you'll be able to make the second payment.
> > 
> > If it matters, I configure the app to connect only to my own trusted Bitcoin node, so I only ever have one active connection at most. I notice that outgoing payments never show as "Sent" until they appear in a block, presumably because the app never sees the transaction come in over any connection.
> 
> Yes, that's the issue. Because you're connecting only to one node, you
> don't get any instant confirmations -- due to a Bitcoin protocol
> limitation you can only get them from nodes you don't post the tx to.

Odd, I just tried the above as well - with multiple peers connected -
and had the exact same problem.

-- 
'peter'[:-1]@petertodd.org
00000000000000000e83c311f4244e4eefb54aa845abb181e46f16d126ab21e1

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 permalink raw reply	[|nested]
2015-05-25 20:03     ` Matt Whitlock
  2015-05-25 20:29       ` Andreas Schildbach

  
From: Mike Hearn @ 2015-05-25 21:12 UTC (permalink / raw)
  To: Matt Whitlock;  Bitcoin Dev

[-- Attachment #1: Type: text/plain, Size: 570 bytes --]

>
> If it matters, I configure the app to connect only to my own trusted
> Bitcoin node, so I only ever have one active connection at most.


Ah, I see, non default configuration. Because the Bitcoin network can and
does change in backwards incompatible ways, the app wants to see that the
transaction it made actually propagated across the network. If you set a
trusted node it won't see that.

Probably the logic should be tweaked so if you set a trusted node you're
just assumed to know what you're doing and we assume the transactions we
make ourselves always work.

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 permalink raw reply	[|nested]
2015-05-25 20:29       ` Andreas Schildbach
  2015-05-25 21:05         ` Peter Todd

  
From: Warren Togami Jr. @ 2015-05-25 21:14 UTC (permalink / raw)
  Cc: Bitcoin Dev

On Mon, May 25, 2015 at 1:29 PM, Andreas Schildbach
<andreas@schildbach•de> wrote:
> Yes, that's the issue. Because you're connecting only to one node, you
> don't get any instant confirmations -- due to a Bitcoin protocol
> limitation you can only get them from nodes you don't post the tx to.

Is it really wise to call this a "confirmation"?  All this is really
telling you is one seemingly random peer has relayed the transaction
back to you that you sent to a presumably different seemingly random
peer.

Warren



 permalink raw reply	[|nested]
2015-05-25 18:44 ` Mike Hearn

  2015-05-25 22:03     ` Mike Hearn
  
From: Peter Todd @ 2015-05-25 21:26 UTC (permalink / raw)
  To: Mike Hearn;  Bitcoin Dev

[-- Attachment #1: Type: text/plain, Size: 1384 bytes --]

On Mon, May 25, 2015 at 08:44:18PM +0200, Mike Hearn wrote:
> Wallets are incentivised to do a better job with defragmentation already,
> as if you have lots of tiny UTXOs then your fees end up being huge when
> trying to make a payment.
> 
> The reason they largely don't is just one of manpower. Nobody is working on
> it.
> 
> As a wallet developer myself, one way I'd like to see this issue be fixed
> by making free transactions more reliable. Then wallets can submit free
> transactions to the network to consolidate UTXOs together, e.g. at night
> when the user is sleeping. They would then fit into whatever space is
> available in the block during periods of low demand, like on Sunday.

This can cause problems as until those transactions confirm, even more
of the user's outputs are unavailable for spending, causing confusion as
to why they can't send their full balance. It's also inefficient, as in
the case where the user does try to send a small payment that could be
satisfied by one or more of these small UTXO's, the wallet has to use a
larger UTXO.

With replace-by-fee however this problem goes away, as you can simply
double-spend the pending defragmentation transactions instead if they
are still unconfirmed when you need to use them.

-- 
'peter'[:-1]@petertodd.org
00000000000000000aa9033c06c10d6131eafa3754c3157d74c2267c1dd2ca35

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 permalink raw reply	[|nested]
2015-05-25 21:26   ` Peter Todd

  
From: Mike Hearn @ 2015-05-25 22:03 UTC (permalink / raw)
  To: Peter Todd;  Bitcoin Dev

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CPFP also solves it just fine.

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 permalink raw reply	[|nested]
2015-05-25 21:05         ` Peter Todd

  
From: Andreas Schildbach @ 2015-05-26 12:40 UTC (permalink / raw)
  To: bitcoin-development

On 05/25/2015 11:05 PM, Peter Todd wrote:
> On Mon, May 25, 2015 at 10:29:26PM +0200, Andreas Schildbach wrote:
>>> I see this behavior all the time. I am using the latest release, as far as I know. Version 4.30.
>>>
>>> The same behavior occurs in the Testnet3 variant of the app. Go in there with an empty wallet and receive one payment and wait for it to confirm. Then send a payment and, before it confirms, try to send another one. The wallet won't let you send the second payment. It'll say something like, "You need x.xxxxxx more bitcoins to make this payment." But if you wait for your first payment to confirm, then you'll be able to make the second payment.
>>>
>>> If it matters, I configure the app to connect only to my own trusted Bitcoin node, so I only ever have one active connection at most. I notice that outgoing payments never show as "Sent" until they appear in a block, presumably because the app never sees the transaction come in over any connection.
>>
>> Yes, that's the issue. Because you're connecting only to one node, you
>> don't get any instant confirmations -- due to a Bitcoin protocol
>> limitation you can only get them from nodes you don't post the tx to.
> 
> Odd, I just tried the above as well - with multiple peers connected -
> and had the exact same problem.

It should work, I'm testing this regularly. Can you report an issue
through the app and attach your log when this happens again?





 permalink raw reply	[|nested]