Consensus based block size retargeting algorithm (draft)

Summary:

The author of this BIP (Bitcoin Improvement Proposal) has reworked the original gist based on feedback received from various sources including Reddit and IRC. The proposal requests a BIP number assignment. The proposed BIP, XX, is titled "Consensus based block size retargeting algorithm". The author's motivation behind the proposal is to address the issue of Bitcoin's inability to respond in a timely manner to an increase in popularity due to a mass adoption curve, which could harm its credibility. Predetermined block size increases are also deemed problematic as they attempt to predict the future and may have unintended consequences such as damaging the possibility for a fee market to develop. Dynamic block size adjustments can be gamed by larger hash power and free voting can enable manipulation of the block size. The proposal introduces a cost to increase the block size limit, ensuring that the mining community will only collude to increase it when necessary and reduce it when unnecessary. Larger miners cannot force their wishes so easily because they will have to pay extra difficulty targets and can be downvoted by the objecting hash power at no cost. Difficulty is used as a penalty instead of a fixed cost in bitcoins because it is less predictable. The initial block size limit is set at 1MB. Miners can vote to increase or decrease the block size limit by a maximum of 10% of the current block size limit each time they create a block. These votes will be used to recalculate the new block size limit every 2016 blocks. The first 4 bytes of the coinbase field shall be repurposed for voting as an unsigned long integer which will be the block size in bytes. If a miner votes for an increase, the block hash must meet a difficulty target proportionally larger than the standard difficulty target based on the percentage increase they voted for. Blocks that are larger than the calculated base block size limit are invalid and will be rejected. The proposal is based on ideas and concepts derived from the writings of Meni Rosenfeld and Gregory Maxwell. The work is placed in the public domain. A pull request for this BIP has been made to the Bitcoin Improvement Proposals repository on GitHub.

Updated on: 2023-06-10T20:55:12.960588+00:00