The proof-of-work also solves the problem of determining
representation in majority decision
making. If the majority were based on one-IP-address-one-vote, it
could be subverted by anyone
able to allocate many IPs. Proof-of-work is essentially
one-CPU-one-vote. The majority
decision is represented by the longest chain, which has the greatest
proof-of-work effort invested
in it. If a majority of CPU power is controlled by honest nodes, the
honest chain will grow the
fastest and outpace any competing chains. To modify a past block, an
attacker would have to
redo the proof-of-work of the block and all blocks after it and then
catch up with and surpass the
work of the honest nodes. We will show later that the probability of a
slower attacker catching up
diminishes exponentially as subsequent blocks are added.
 
It's interesting that Nash Equilibrium isn't mentioned here.  Since each miner has the option to either contribute to the longest chain or not, even if the miners know what strategy the other miners will use, they still wouldn't change their decision to contribute to the majority.
 
For example, if I run a shop that takes rain checks, but I sell an
item to a higher bidder who didn't have a hold on the item, that is
not honest, but it may be selfish profit maximizing.
 
It would be honest if the store policy said ahead of time they are allowed to sell rain checks for more in such an occurrence.  Although this is a good example of the difference between honest and rational.  I think this means it's not a Nash Equilibrium if we needed to rely on the store owner to be honest.
 
Satoshi said an honest majority is required for the chain to be
extended. Honest is not really defined though. Honesty, in my
definition, is that you follow a pre specified rule, rational or not.
 
My take is that "rational" is probably a better word than honest.  In terms of a Nash Equilibrium, each participant is simply trying to maximize their outcome and honesty doesn't matter (only that participants are rational).
 
It seems a lot of the RBF controversy is that Protocol developers have
aspired to make the honest behavior also be the rational behavior.
This is maybe a good idea because, in theory, if the honest behavior
is rational then we can make a weaker assumption of selfishness
maximizing a parameter.
 
I'm curious, can RBF can be described by a Nash Equilibrium?  If yes, then it also shouldn't matter if participants are honest?
 
Overall, it might be nice to more tightly document what bitcoins
assumptions are in practice and what those assumptions do in terms of
properties of Bitcoin, as well as pathways to weakening the
assumptions without compromising the behaviors users expect the
network to have.  An "extended white paper" if you will.
 
White paper 1.1 :D
 
A last reflection is that Bitcoin is specified with an honest majority
assumption, but also has a rational dishonest minority assumption over
both endogenous (rewards) and exogenous (electricity) costs. Satoshi
did not suggest, at least as I read it, that Bitcoin works with an
rational majority assumption. (If anyone thinks these three are
similar properties you can make some trivial counterexamples)
 
My take is the opposite unless I'm missing something.  Participants are always incentivized to choose the rational solution (Not to waste electricity on a minority chain).
 
Cheers,
-Yancy

On 2022-10-16 19:35, Jeremy Rubin via bitcoin-dev wrote:
The Bitcoin white paper says:

The proof-of-work also solves the problem of determining
representation in majority decision
making. If the majority were based on one-IP-address-one-vote, it
could be subverted by anyone
able to allocate many IPs. Proof-of-work is essentially
one-CPU-one-vote. The majority
decision is represented by the longest chain, which has the greatest
proof-of-work effort invested
in it. If a majority of CPU power is controlled by honest nodes, the
honest chain will grow the
fastest and outpace any competing chains. To modify a past block, an
attacker would have to
redo the proof-of-work of the block and all blocks after it and then
catch up with and surpass the
work of the honest nodes. We will show later that the probability of a
slower attacker catching up
diminishes exponentially as subsequent blocks are added.

This, Satoshi (who doesn't really matter anyways I guess?) claimed
that for Bitcoin to function properly you need a majority honest
nodes.

There are multiple behaviors one can describe as honest, and
economically rational or optimizing is not necessarily rational.

For example, if I run a shop that takes rain checks, but I sell an
item to a higher bidder who didn't have a hold on the item, that is
not honest, but it may be selfish profit maximizing.

Satoshi said an honest majority is required for the chain to be
extended. Honest is not really defined though. Honesty, in my
definition, is that you follow a pre specified rule, rational or not.

It seems a lot of the RBF controversy is that Protocol developers have
aspired to make the honest behavior also be the rational behavior.
This is maybe a good idea because, in theory, if the honest behavior
is rational then we can make a weaker assumption of selfishness
maximizing a parameter.

However, Satoshi did not particularly bound what aspects of honesty
are important for the network, because there isn't a spec defining
exactly what is honest or not. And also as soon as people are honest,
you can rely on that assumption for good effect.

And sometimes, defining an honest behavior can be creating a higher
utility system because most people are "law abiding citizens" who
might not be short term rational. For example, one might expect that
miners would be interested in making sure lightning closes are
"accurate" because increasing the utility of lightning is good for
Bitcoin, even if it is irrational.

It seems that the NoRBF crowd want to rely on an honest majority
assumption where the honest behavior is not doing replacement if not
requested. This is really not much different than trying to close
lightning channels "the right way".

However, where it may be different, is that even in the presence of
honest majority, the safety of 0conf isn't assured given the potential
of race conditions in the mempool. Therefore it's not clear to me that
0conf working well is something you can drive from the Honest Majority
Assumption (where honest includes first seen).

Overall, it might be nice to more tightly document what bitcoins
assumptions are in practice and what those assumptions do in terms of
properties of Bitcoin, as well as pathways to weakening the
assumptions without compromising the behaviors users expect the
network to have.  An "extended white paper" if you will.

 It's somewhat clear to me that we shouldn't weaken assumptions that
only seem local to one subsystem of Bitcoin if they end up
destabilizing another system. In particular, things that decrease
"transaction utility" for end users decrease the demand for
transactions which hurts the fee market's longer term viability, even
if we feel good about making an honest policy assumption into a self
interested policy assumption.

A last reflection is that Bitcoin is specified with an honest majority
assumption, but also has a rational dishonest minority assumption over
both endogenous (rewards) and exogenous (electricity) costs. Satoshi
did not suggest, at least as I read it, that Bitcoin works with an
rational majority assumption. (If anyone thinks these three are
similar properties you can make some trivial counterexamples)

Cheers,

Jeremy
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