Subject: Re: [bitcoin-dev] Proposal: rewarding fees to next block miner

From: Eric Voskuil <[email-masked]>
Date: Mon, 29 Jan 2018 19:52:21 -0800

On 01/29/2018 05:59 PM, Gregory Maxwell wrote:
> On Mon, Jan 29, 2018 at 11:21 PM, Eric Voskuil <[email-masked]> wrote:
>> Block space created by a miner is property that belongs to the miner, it
>> can be sold or not sold.
> 
> That case would be stronger when there is no more subsidy, but we
> collectively the uses of Bitcoin are currently paying miners around
> $130k USD per block in the form of inflation for the job of honestly
> complying with the Bitcoin protocol.

The miner who creates a block owns the block, he/she has selected the
transactions and directs the reward. The case for this could hardly be
stronger.

The fact that there is subsidy implies that *part* of the cost of
creating the block is offset. But by not accepting the highest fee
transactions the miner is still accepting a net loss by purchasing the
space for himself. The hash power generated by the miner to create the
block contributes to confirmation security to a greater degree than for
which he has been rewarded.

You seem to be implying that there is dishonesty involved in purchasing
block space, or that it is somehow possible to earn reward while not
complying with the protocol. There is no honest or dishonest compliance
with a protocol, there is just compliance or non-compliance.

> I don't think you can argue that they have any more right to do that
> than any of us have a right to run software that invalidates their
> coinbase outputs when they do; which would be the sort of retaliation
> they might get targeted with.

Everyone can do whatever they want with their own machines, and I
haven't argued otherwise. As far as "rights" go, Bitcoin doesn't care.
I'm not one who has regularly raised hard fork fears while at the same
time threatening them. My objective is to dispel flawed reasoning, not
to negotiate for the rights of some group over another.

Some economic theories that get thrown around are baffling, this idea of
"retaliation" among them. Presumably the objective is to reduce
transaction confirmation costs. The theory would be that mining empty
blocks or mining own transactions is "unfairly" increasing revenue to
miners. Despite the incorrectness of this theory, the proposed cure
attempts to reduce returns to miners. However the consequence of
reducing returns to miners is simply a reduction of hash power (as the
least efficient miners become insolvent). Miners will continue to earn
the same rate of return on their capital as always. And the cost of
transactions will remain the same...

The presumed mechanism of the proposed retaliation is also baffling. A
miner (or anyone) can always create transactions, pay fees, and send
them out to the network. Given that we presume transactions without
identity, it is not possible (or desirable) to detect the source of
transactions. Maybe the assumption is that sending such transactions out
to the network would not satisfy the miner's objective, since the fees
cannot be "recovered". But this is the original flaw. Fees spent to
one's self cannot be recovered either! So if a miner wants to blow money
by filling up blocks with market fee transactions, they will be able to
do so at the same cost no matter how one tries to "retaliate".

e