[Bitcoin-ml] Transaction mining priorities.

Andrew Johnson andrew.johnson83 at gmail.com
Tue Sep 19 21:16:35 UTC 2017

On Tue, Sep 19, 2017 at 3:38 PM Tom Zander via bitcoin-ml <
bitcoin-ml at lists.linuxfoundation.org> wrote:

> On Tuesday, 19 September 2017 21:51:09 CEST Andrew Johnson via bitcoin-ml
> wrote:
> >  The only reason to mine is to make money,
> While not wrong, its also not correct.
> And I do agree with Edward on the general message here.
> Blindly stating that for miners the fees are the most important is utterly
> missing reality. Missing basic economics.
> The music industry is making the same mistake, they too say that people
> that
> copy the music without paying are actually stealing. Because, they must
> reason, we *could have* received money from them instead.

I'm not understanding your analogy here. I think a better one would be that
a customer is offering you money for an album(highest fee paying
transaction), and you're deciding to ignore them(not pick the highest fee
transaction) and give one to someone else for free or reduced cost
instead(using criteria other than fee paid to determine inclusion into your
current block).  That doesn't make any sense.

> This is not how it works. Just because you can ask for a fee doesn’t mean
> its the most profitable thing to do.
> The basic fact here is that the actual cost of mining a 1MB or a 20MB block
> has no effective difference for miners cost structure.

Orphan risk is a huge one.

> Charging everyone fees will have the natural effect of;
> * killing usecases.
> * stiffling growth
> * having a competing chain (with different POW hardware) that may be
> better.
> The miner is the ultimate investor in the chain. They need to see their
> investment turned into coins in a short time before the hardware becomes
> unprofitable.

That's kind of the point I'm making. Mining hardware has a short lifecycle,
today's miner doesn't care what the price is 10 years from now, they can't
afford to be that forward looking.

> They can’t expect to sit on those coins for the next 10 years hoping they
> get more profitable.

Most don't, I'd hazard to guess that a lot of freshly mined coins are used
to pay for ongoing hardware and electricity expenses.  I'm sure some are
held as well, but as a miner you can't really afford to speculate on the
price of a coin. If that was your game, you should be buying with fiat.
Mining is actually kind of a bet that the price isn't going to skyrocket,
since in that case you would have been better off just buying your position
upfront rather than mining for it over time.

> So now we look at successful growth. Check the website from y-combinator
> and
> similar resources, they explain how a small company can grow profitable.
> The bottom line is always growing your customer base. These customers don’t
> even have to be paying customers. The important part is that they are
> *your*
> customers. And network effects makes that an exponential growth.

Individual centralized companies running in the red for a long period of
time to essentially buy their own personal customer base/network effect
with the intention of monetizing it later isn't even close to the same
thing as being one of many miners in a distributed system.  This is also a
poor comparison, in my opinion.

> So far Bitcoin (Cash) has a tiny customer base, so growth is where the
> biggest potential is.

Didn't realize we were talking about Cash, in this case you have a lot of
room for growth until transaction selection becomes an issue. Currently
each block clears the mempool, even when there's several hours between
them. Transaction selection is irrelevant when you just grab all of them,
and I don't think it's going to have any impact on adoption at this point.
Cart before the horse, if you will.

> Sorry for not mentioning this in the original post, sometimes I forget the
> basics.
> --
> Tom Zander
> Blog: https://zander.github.io
> Vlog: https://vimeo.com/channels/tomscryptochannel
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> bitcoin-ml at lists.linuxfoundation.org
> https://lists.linuxfoundation.org/mailman/listinfo/bitcoin-ml
Andrew Johnson
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