Author: Dave Hudson 2015-08-04 18:41:53
Published on: 2015-08-04T18:41:53+00:00
Peter R shared a research paper titled "A Transaction Fee Market Exists Without a Block Size Limit" on the Bitcoin-Dev mailing list. The paper argues that a block size limit is not necessary to ensure a functioning fee market due to the orphaning cost and presents useful charts such as the cost to produce large spam blocks. However, it does bring up questions related to mining cartels and the size of the UTXO set. The paper can be downloaded in PDF format or viewed with a web-browser. The paper introduces the block space supply curve and the mempool demand curve to show how a rational Bitcoin miner should select transactions from his node's mempool when creating a new block to maximize his profit in the absence of a block size limit. It explains how the supply and demand curves from classical economics are related to the derivatives of these two curves and proves that producing the quantity of block space indicated by their intersection point maximizes the miner's profit. The paper then shows that an unhealthy fee market cannot exist since it requires communicating information at an arbitrarily fast rate. Finally, the paper considers the conditions under which a rational miner would produce big, small, or empty blocks and estimates the cost of a spam attack.
Updated on: 2023-06-10T18:09:39.229458+00:00