Subject: [bitcoin-dev] Incentivising full nodes by having SPV nodes to pay for data requests

From: Luv Khemani <[email-masked]>
Date: Tue, 4 Aug 2015 01:06:40 +0800

The current block size debate has brought up an important, albeit often neglected observation. Full nodes suffer from a tragedy of the commons problem and therefore are likely to continue decreasing as a percentage of total Bitcoin nodes. This also results in a vicious circle as more and more people use SPVs, the burden on existing full nodes will increase even without a block size increase, which will further reduce the number of full nodes . A few people have mentioned it in blogs or reddit, but the topic is generally quickly overshadowed by posts along the lines of  "RAISE the blocksize already!".
Full nodes bear the full cost of validating/relaying/storing the blockchain and servicing SPV clients but gain nothing financially from it, yet they serve an important role in validating transactions and keeping miner dishonesty in check. If there were few independent full nodes, it would be possible for 3-4 of the biggest mining pools to collude and do literally whatever they wanted with the protocol, including inflating the money supply, freezing funds or even confiscating funds, because who would know? And even if someone running a full node did voice out, the majority of users on SPV/Coinbase/etc.. would be powerless to do anything about it and would likely bear with the changes to protect status quo, just as is the case with current fiat regimes where people bear with QE/Inflation/bail outs because they are so dependent on the current system that they would rather tolerate any injustice than to have the system go down and bring them with it. This is the primary reason why many in the technical community are against drastic blocksize increases, as this will only worsen the problem of decentralization as this cost increases. And as long as full nodes are running on charity, i'm fully in agreement with the conservative block size camp. 
However, it is important to note that this seems to be an economic problem instead of a technical one. I cannot deny the argument from the big block side that technically, the hardware/bandwidth required to run full nodes supporting considerably larger blocks (4MB-8MB) is not out of reach of many individuals around the globe. The core issue in my opinion is that of incentive, because at the end of the day, running a full node is not free and at larger blocks costs will not be trivial. In my opinion, its perhaps our insistence that full nodes cant be incentivised that contributes to centralization pressures and discourages increasing of blocksize even though the technology exists to support it.
Technically, existing hardware is capable of validating/processing blocks in the region of an order of magnitude larger than the current limit. Bandwidth requirements for running a validating full node are also not very high if you are not mining, as you can afford to wait a couple of minutes to download your block. This is obviously not the case for miners who need to download new blocks asap to avoid idle hash power or as has been seen in the recent fork, SPV mining (which is extremely undesirable for the network). IBLT should help greatly in reducing the propagation time of new blocks and ease peak bandwidth requirements. But im not worried about the miners, they are after all being financially compensated for what they are doing and investing in more bandwidth(either locally or running a full node remotely) can be seen as a cost of the business as long as the cost of running a full node is insignificant to the cost of hashing equipment to keep barriers to mining low. 

Before the concept lightning, there did not seem to be any trustless way of feasibly paying small micropayments to full nodes for their services. However, with payment channels and lightning, this may no longer be an issue. A node could advertise it's rates to a SPV nodes upon connection and the SPV could either agree or look for another node with lower fees. If implemented, fees are likely to be trivial(few satoshis per request) as competition will drive down fees close to the cost of running a full node. This should spur an increase in the number of full nodes and increase decentralization of the network.
I just wanted to float the idea and hear comments/feedback/critiques of this idea.