Author: Erik Aronesty 2022-07-07 21:11:47
Published on: 2022-07-07T21:11:47+00:00
The relationship between block size and fees is non-linear. Fees are much higher in a restricted environment where the ones moving more sats will win top spots and pay as much as reasonable. Smaller blocks provide better security for the network both in validation and fees. Without a bidding war, everyone can post 1 SAT/byte. In a bidding war, larger transactions will pay much higher rates, and several papers have been written to prove this. Eric Voskuil stated that reducing block size does not change the fee aspect of the block reward, assuming half the space means twice the fee per average transaction, which keeps the reward constant. The reason for smaller blocks is to ensure individuals can afford to validate, which is a threshold criteria. Miners would still have to fix a point in time to mine with unlimited size blocks, gathering as much fee as they can optimize in some time period presumably less than 10 minutes. Increasing demand is the only thing that increases double-spend security and censorship resistance, assuming a fee-based reward. With rising demand, there is a rising overall hash rate, lowering the depth/time requirement implied to secure a given tx amount.Erik Aronesty suggested that lowering the block size could help prevent the issue of double spending while increasing fee pressure and double-spend security while reducing the burden on node operators. Changes to inflation are likely off the table. Peter Todd stated that the present amount of security is about 1.7% of the total coin supply/year, and Bitcoin seems to be working fine. An amount low enough to be easily affordable but non-zero is fine. 1% would be fine; 0.5% would probably be fine; 0.1% would work out to be 7.2%, which is likely to be dwarfed by economic shifts.
Updated on: 2023-06-15T21:19:55.248175+00:00