Author: Benjamin 2015-08-05 08:33:13
Published on: 2015-08-05T08:33:13+00:00
The research paper titled "A Transaction Fee Market Exists Without a Block Size Limit" by Peter R was shared on the Bitcoin-Dev mailing list. The paper discusses the rational selection of transactions from a node's mempool by a Bitcoin miner to maximize their profit in the absence of a block size limit. It introduces the concept of block space supply and mempool demand curves, which describe the cost for a miner to supply block space by accounting for orphaning risk and the fees offered by transactions in the mempool. The paper proves that producing the quantity of block space indicated by the intersection point of these curves maximizes the miner's profit. The paper also argues that an unhealthy fee market cannot exist as it requires communicating information at an arbitrarily fast rate, and estimates the cost of a spam attack. While the paper does not argue that a block size limit is unnecessary in general, it demonstrates that due to the orphaning cost, a block size limit is not necessary to ensure a functioning fee market. However, the paper brings 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 through the links provided in the email.
Updated on: 2023-06-10T18:10:41.474521+00:00