Subject: Re: [bitcoin-dev] Security problems with relying on transaction fees for security

From: "Russell O'Connor" <[email-masked]>
Date: Mon, 11 Jul 2022 16:35:02 -0400

On Mon, Jul 11, 2022 at 2:19 PM Bram Cohen via bitcoin-dev <
[email-masked]> wrote:

> If transaction fees came in at an even rate over time all at the exact
> same level then they work fine for security, acting similarly to fixed
> block rewards. Unfortunately that isn't how it works in the real world.
> There's a very well established day/night cycle with fees going to zero
> overnight and even longer gaps on weekends and holidays. If in the future
> Bitcoin is entirely dependent on fees for security (scheduled very
> strongly) and this pattern keeps up (overwhelmingly likely) then this is
> going to become a serious problem.
>
> What's likely to happen is that at first there will simply be no or very
> few blocks mined overnight. There are likely to be some, as miners at first
> turn off their mining rigs completely overnight then adopt the more
> sophisticated strategy of waiting until there are enough fees in the
> mempool to warrant attempting to make a block and only then doing it.
> Unfortunately the gaming doesn't end there. Eventually the miners with
> lower costs of operation will figure out that they can collectively reorg
> the last hour (or some time period) of the day overnight and this will be
> profitable. That's likely to cause the miners with more expensive
> operations to stop attempting mining the last hour of the day preemptively.
>
> What happens after that I'm not sure.
>

Miners will learn to create anyone-can-spend outputs to bribe other miners
to build on their block rather than reorg it.  (Due to the coinbase
maturity, this will require some amount of floating capital.)