Published on: 2015-08-07T05:20:21+00:00
In 2015, Wes Green proposed a game theory-based solution to the block size issue in Bitcoin. The suggestion was to allow miners to double the block size at any time but penalize them by taking a percentage increase in rewards from both fees and normal rewards. The remaining amount would then be rewarded to the next miner who finds a block. The proposal left the algorithm programming up to the miner.According to one response to Green's proposal, the equilibrium for the game would be to maintain the same block size. The response explained that if there were a significant backlog of fee-paying transactions with stable fees per MB, miners could either receive a fixed reward or increase the block size and earn a higher reward, factoring in the penalty. The response also suggested that having more reasonable scaling parameters would make it easier to create a fee market for Bitcoin transactions.The response provided some assumptions on fee levels to illustrate the system. For example, with 1MB blocks, free transactions and no fees would be expected. With 8MB blocks and people paying 0.1 mBTC/kB in fees, 0.8 BTC in fees per block would be acceptable. The conclusion was that miners would want to choose parameters that clear the market for block space at a price determined by their costs. However, the current problems identified were that the cost parameter was too high, resulting in low fees, and the capacity parameter was too low, causing some transactions to be dropped.The proposal aimed to resolve Bitcoin's block size issue using game theory instead of relying on projected percentage growth of bandwidth speeds and other technical factors. It suggested allowing miners to increase the block size when there is organic growth in the network, while dealing with spam attacks as they currently are. The penalty associated with increasing the block size would encourage slow growth while preserving return on equity. Additionally, this system would incentivize miners to pay attention to the blockchain size and prevent it from growing too quickly. It would also force miners to hold the entire blockchain, adding a gamification element to the process.
Updated on: 2023-08-01T14:59:05.195080+00:00