Author: Peter Todd 2022-07-11 21:53:37
Published on: 2022-07-11T21:53:37+00:00
In a recent bitcoin-dev email, Bram Cohen discussed the potential issues that could arise if transaction fees became the sole source of security for Bitcoin. He noted that transaction fee rates are not consistent and tend to drop to zero overnight and over weekends and holidays. This means that miners may stop mining altogether overnight or wait until there are enough fees in the mempool to justify making a block. The concern is that miners with lower costs of operation will reorg the last hour of the day overnight, causing miners with more expensive operations to stop mining preemptively. Cohen warned that this could lead to a slippery slope where a cabal of miners reorgs everyone else out of existence and eventually 51% attacks the whole system. He suggests that having transaction fees be about 10% of rewards on average works well, and relying completely on transaction fees for security would likely be disastrous. One solution suggested was to smooth out fees over time, but this is made difficult by the fact that users can bypass the fee system by including anyone-can-spend outputs in their transactions or paying large miners out-of-band to get their transactions confirmed.Fee-smoothing schemes that try to smooth market-based fees would fail, so the only type of feasible fee-smoothing scheme is one that smooths an entirely separate category of fees that are made mandatory. However, achieving the economic impact of inflation through fixed value*time-based fees is a gigantic accounting headache and problematic for existing layer-2 protocols because it reduces the value of txouts as they age (demurrage).Meanwhile, wallets opportunistically collecting dust during times of low transaction fees would help save users on fees, although with the widespread use of Lightning, wallets may not have dust to collect. With sufficiently efficient layer-2 solutions, it's unclear how much demand there will be for block space.
Updated on: 2023-06-15T22:50:06.301116+00:00