Author: Owen Gunden 2015-05-10 17:36:32
Published on: 2015-05-10T17:36:32+00:00
In an email discussion, Gregory Maxwell raised the point that changing how the size limit is computed can help to better align incentives and reduce risk. He notes that a major cost to the network is the Unspent Transaction Output (UTXO) impact of transactions. However, since the limit is blind to UTXO impact, miners would gain less income if they substantially factored in UTXO impact into their fee calculations. Without fee impact, users have little reason to optimize their UTXO behavior. Along the lines of aligning incentives with a diversity of costs to a variety of network participants, Maxwell suggests looking at Justus Ranvier's general approach. Ranvier's approach, as outlined in an article posted on Liberty.me, relies on ideas such as micropayment channels, but it aims to provide a long-term ideal direction for Bitcoin. The article discusses the economic fallacies surrounding the block size limit, arguing that the limit should be set not by an arbitrary number but by the free market. Ranvier proposes a solution where the block size is determined by the price of fees and the willingness of users to pay them, rather than a fixed limit. This would allow for greater price discovery and alignment of incentives among network participants.
Updated on: 2023-06-09T20:09:06.582643+00:00