Subject: Re: [Bitcoin-development] Fwd: Block Size Increase Requirements

From: Dave Hudson <[email-masked]>
Date: Sun, 31 May 2015 15:17:10 +0100

> On 31 May 2015, at 13:52, Gavin Andresen <[email-masked]> wrote:
> 
> On Sat, May 30, 2015 at 9:31 PM, Chun Wang <[email-masked] <mailto:[email-masked]>> wrote:
> If someone propagate a 20MB block, it will take at best 6 seconds for
> us to receive to verify it at current configuration, result of one
> percent orphan rate increase.
> 
> That orphan rate increase will go to whoever is producing the 20MB blocks, NOT you.

There's an interesting incentives question if the mining fees ever become large enough to be interesting. Given two potential blocks on which to build then for the best interests of the system we'd want miners to select the block that confirmed the largest number of transactions since that puts less pressure on the network later. This is at odds with the incentives for our would-be block maker though because the incentive for mining would be to use whichever block left the largest potential fees available; that's generally going to be the smaller of the two.

This, of course, only gets worse as the block reward reduces and fees become the dominant way for miners to be paid (and my hypothesis that eventually this could lead to miners trying to deliberately orphan earlier blocks to "steal" fees because the fixed block reward is no longer the dominant part of their income).

When coupled with the block propagation delay problem increasing the risk of orphan races I'm pretty sure that this actually leads to miners having an incentive to continually mine smaller blocks, and that's aside from the question of whether smaller blocks will push up fees (which also benefits miners). 

Cheers,
Dave