Author: Jeremy Rubin 2022-10-18 03:34:08
Published on: 2022-10-18T03:34:08+00:00
The article discusses the concept of Bitcoin functioning in an adversarial, stepwise selfishly interested model. However, it is crucial to keep in mind that this is an aspiration and not the reality of the network today. The network relies on people caring about other things exogenous to simplified game descriptions. The article quotes the whitepaper and highlights the steps to run the network. It also explains how incentives encourage honest miners to join and persuade nodes of hidden phenotype "Greedy" to prefer honest behavior, improving network convergence.The article discusses a diagram that helps understand events observed in a certain order and asks which block one would want to attempt to mine at specific times. Additionally, the article mentions that something like mining Block Z is most incentive-compatible for miners but supremely bad UX for users.The article also discusses building on the most work chain and how it may not be rational in many normal circumstances that can come up today under the stated reference strategy. For example, if one assumes all other miners are tip miners, they should pick the one with more profit for them, which is the new one made as a non-tip miner since one "shared" some fee.Furthermore, the article delves into the controversy surrounding Replace-by-Fee (RBF) and how the assumption of rationality is more important than honesty in a Nash Equilibrium because participants are simply trying to maximize their outcome. Satoshi did not suggest that Bitcoin works with a rational majority assumption.Finally, the article discusses honesty versus rationality and how defining an honest behavior that may not be short-term rational could create a higher utility system. Overall, it is crucial not to weaken assumptions that only seem local to one subsystem of Bitcoin if they end up destabilizing another system. Decreasing "transaction utility" for end-users decreases the demand for transactions, which hurts the fee market's longer-term viability.
Updated on: 2023-06-16T01:53:23.353160+00:00