Hearn: The resolution of the Bitcoin experiment [LWN.net]

Hearn: The resolution of the Bitcoin experiment

Posted Jan 21, 2016 22:20 UTC (Thu) by nybble41 (subscriber, #55106)
In reply to: Hearn: The resolution of the Bitcoin experiment by Fats
Parent article: Hearn: The resolution of the Bitcoin experiment

> No, clients only generate transactions and transactions only have value if included in a block by a miner.

Clients also validate the blocks they receive before appending them to their own local copy of the blockchain. If a block isn't seen as valid by a majority of clients, regardless of how many miners approve of it, then the block is effectively not part of the blockchain. Clients will not show the transactions in that block as confirmed (including the coinbase transaction though which the miner gets paid), or recognize other blocks which depend on those transactions as valid. As a result, miners cannot effectively avoid following any rules which most clients choose to enforce.

Miners do have more power when it comes to *rejecting* blocks, since even if you get a majority of other clients to accept your block as valid, the other miners can simply ignore it and build a longer alternative blockchain by virtue of having significantly more computing power at their disposal; the longest valid chain will be seen as the authoritative ledger. Changing this property would make it much more difficult to ensure convergence.

A change in the hash function would be a rule enforced by the clients. Assuming a majority of clients backed the change, miners who continued to use the old hash function would find that their blocks carry little weight. Transactions spending the mining reward and fees from blocks using the old hash function would only be seen as valid by a minority of clients, who in turn would only be able to spend what they receive within the limited circle of clients following the old rules; network effects would push the remaining holdouts, both miners and clients, to switch to the new hash function.

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Hearn: The resolution of the Bitcoin experiment

Posted Jan 21, 2016 22:42 UTC (Thu) by Fats (guest, #14882) [Link] (3 responses)

>Clients also validate the blocks they receive before appending them to their own local copy of the blockchain. If a block isn't seen as valid by a majority of clients, regardless of how many miners approve of it, then the block is effectively not part of the blockchain. Clients will not show the transactions in that block as confirmed (including the coinbase transaction though which the miner gets paid), or recognize other blocks which depend on those transactions as valid. As a result, miners cannot effectively avoid following any rules which most clients choose to enforce.

Again no, miners are by design the entities in bitcoin that enforces rules and build the blockchain. Clients who don't follow will in the end not be possible anymore to generate transactions that will be included in blocks mined by the miners. Of course you can ignore bitcoins send to you in a block you don't like but you can't send bitcoins a second time that is already in a block accepted by the miners.

Hearn: The resolution of the Bitcoin experiment

Posted Jan 21, 2016 23:04 UTC (Thu) by nybble41 (subscriber, #55106) [Link] (2 responses)

> miners are by design the entities in bitcoin that enforces rules and build the blockchain.

Again no, miners may build the blockchain, but by design all nodes enforce the rules. (And any node that contributes to building the blockchain is a miner by definition, so the first part is a tautology.)

> Clients who don't follow will in the end not be possible anymore to generate transactions that will be included in blocks mined by the miners.

In blocks mined by the miners using the old rules, you mean—blocks which will be ignored by the majority of clients following the new rules. No loss there. Clients will just get their transactions included in other blocks mined according to the new rules.

> Of course you can ignore bitcoins send to you in a block you don't like but you can't send bitcoins a second time that is already in a block accepted by the miners.

You can if the other block wasn't accepted by most clients because it didn't follow their rules. Those clients will not see your transaction as double-spending, because they don't acknowledge the existence of the other block or the conflicting transaction it carried.

To change the rules to allow previously invalid transactions or blocks you need the support of a majority of the miners, because a majority of miners working together can always block a valid transaction from appearing in the blockchain. However, to prohibit previously valid transactions or blocks you only need the support of a majority of the clients. Even if every single (existing) miner was opposed to the change, it wouldn't be enough to make those transactions or blocks appear valid to the majority of recipients, which is where the real power lies.

Hearn: The resolution of the Bitcoin experiment

Posted Jan 21, 2016 23:20 UTC (Thu) by Fats (guest, #14882) [Link] (1 responses)

> In blocks mined by the miners using the old rules, you mean—blocks which will be ignored by the majority of clients following the new rules. No loss there. Clients will just get their transactions included in other blocks mined according to the new rules.

OK, now you are talking different. Now you are talking about a hard fork, e.g. if there are miners that use different rules the clients have the choice which miners to follow. I agree with that but that is all the power they have. But the whole scaling discussion is so difficult because hard forks are so difficult; nothing something easy the clients can choose as you seem to indicate.

Hearn: The resolution of the Bitcoin experiment

Posted Jan 22, 2016 4:56 UTC (Fri) by nybble41 (subscriber, #55106) [Link]

>> In blocks mined by the miners using the old rules, you mean—blocks which will be ignored by the majority of clients following the new rules. No loss there. Clients will just get their transactions included in other blocks mined according to the new rules.
> OK, now you are talking different. Now you are talking about a hard fork, e.g. if there are miners that use different rules the clients have the choice which miners to follow.

Actually, that is exactly what I've been saying all along. However, it's not like the miners form some sort of invite-only cartel. Clients have the option of becoming miners themselves, if no one else wants to do the job according to their specifications. Ergo, they always have a choice of miners to follow.

Hard forks are difficult for social reasons more so than technical ones. No one wants to see a situation where a significant minority backs the losing fork, even if it is short-lived. It makes for bad press. This is why hard forks generally require 95% or higher buy-in before they take effect, and why Bitcoin XT was roundly criticised for setting a lower threshold before it started accepting and mining larger blocks. However, there can be little question that it's ultimately the merchants who accept bitcoin as payment who determine the minimum standards for acceptable blocks. The miners can notarize whatever transactions they want, but they won't get any worthwhile reward unless their blocks are considered valid by the merchants holding the goods and services they wish to purchase.