Uncategorized — Blog — Bitcoin Association Switzerland

Fee smoothing | Luzius Meisser | Jan 26 2016

Luzius Meisser on Jan 26 2016:
This post serves to convince you of the economic benefits of smoothing
the payout of fees across blocks. It incentivizes decentralization and
supports the establishment of a fee market.
Idea: currently, the total amount of fees collected in a block is paid
out in full to whoever mined that block. I propose to only pay out,
say, 10% of the collected fees, and to add the remaining 90% to the
collected fees of the next block. Thus, the payout to the miner
constitutes a rolling average of collected fees from the current and
past blocks. This reduces the marginal benefit of including an
additional transaction into a block by an order of magnitude and thus
aligns the incentives of individual miners better with those of the
whole network. As a side-effect, the disadvantage of mining with a
slow connection is reduced.
Example: currently, given a transaction with a fee of 1000 Satoshis
and global processing cost per transaction of 5000 Satoshis, an
individual miner would still include the transaction if it costs him
500 Satoshis to do so, as the remaining burden of 4500 Satoshis is
carried by others (a classic externality). However, with fee
smoothing, the immediate benefit of including that particular
transaction is reduced to 100 Satoshis, aligning the economic
incentives of the miner better with the whole network and leading the
miner to skip it. Generally, the fraction that is paid out immediately
(here 10%) can be used to adjust the incentive, but not arbitrarily.
Benefits:
  1. The disadvantage of mining with a slow connection is reduced by an
order of magnitude. If it takes 30 seconds to download the latest
block, a miner loses 5% of the potential income from fees as he does
not know yet which transactions to include in the next block. With fee
smoothing, that loss is reduced to 0.5% as he would still earn 90% of
the average fees per block by mining an empty one based on the latest
header.
  1. This is a step towards a free fee market. In an ideal market,
prices form where supply and demand meet, with the fees asymptotically
approaching the marginal costs of a transaction. Currently, supply is
capped and only demand can adjust. Should we ever consider to let
miners decide about supply, it is essential that their marginal
benefit of including an additional transaction is aligned with the
global marginal cost incurred by that additional transaction. Fee
smoothing is a step in this direction.
  1. The incentive to form mining pools is reduced. Currently,
solo-mining yields a very volatile income stream due to the random
nature of mining, leading to the formation of pools. This volatility
will increase to even higher levels once the amount of Bitcoins earned
per block is dominated by (volatile) collected fees and not by
(constant) freshly minted coins, thus increasing the economic pressure
to join a large pool. Fee smoothing reduces that volatility and
pressure.
Problems: touching anything related to fee distribution is a political
minefield. This proposal probably requires a hard fork. Its technical
feasibility was only superficially verified.
This is my first post to this list and I am looking forward to your
comments. In case this proposal is received well, I plan to
specify/implement the idea more formally in order to kick off the
usual process for improvements.

Luzius Meisser
President of Bitcoin Association Switzerland
MSc in Computer Science and MA in Economics
original: http://lists.linuxfoundation.org/pipermail/bitcoin-dev/2016-January/012297.html
submitted by dev_list_bot to bitcoin_devlist [link] [comments]

Bitcoin's Early Days and Eternal September - Luzius Meisser, Bitcoin Association Switzerland Startup Night 2017 - Rückblick (Original) Crypto Mountain Rocks 2017: Is cryptocurrency the future of money? Mylene Kuphal - YouTube

Bitcoin in Echo der ZeitOne of the most relevant news segments on Swiss national radio - Echo der Zeit - reported about Bitcoin and talked to Luzius Meisser. Bitcoin Association Switzerland Paving the way for Bitcoin in Switzerland Bitcoin’s Early Days and its Eternal September Bitcoin Association Switzerland and Why Regulation Kills Innovation – Luzius Meisser Meisser Economics: 1: free Bitcoin hack 2017 100 Real Work thanqs for 300 subscribe: 1: Bitcoin Generator money adder new2017: 1: BITCOIN: 1: Dile kolay! İlk Bitcoin işlemi üzerinden tam 10 yıl geçti: 1 Luzius Meisser, founder of Bitcoin Association Switzerland comments: “This motion is a strong signal to blockchain startups all around the world that the Swiss parliament wants Switzerland to be at the forefront of fintech innovation.” ... However, the time horizon of a miner is not (and should not be) a mere day. Electricity bills come in ... A computer scientist and economist who co-founded the Bitcoin Association Switzerland, Luzius Meisser, has spoken out about the direction of the cryptocurrency industry, pointing to stablecoins as the next big mover.. Meisser, who is also on the board at brokerage firm Bitcoin Suisse AG, was speaking at the Crypto Finance Conference in St Moritz on 16 January when he said that stablecoins and ... Expert Believes Stablecoins Are the Next Big Thing: Co-founder of Bitcoin Association Switzerland, Luzius Meisser, has said that stablecoins are the next big thing in the cryptocurrency sector. He opinionated while speaking at Crypto Finance Conference which was held in St Moritz.

[index] [23436] [2682] [4505] [20107] [34630] [12738] [25007] [31499] [19233] [5537]

Bitcoin's Early Days and Eternal September - Luzius Meisser, Bitcoin Association Switzerland

"FinTech Made in Switzerland": Interview Luzius Meisser, Bitcoin Association Switzerland - Duration: 27:19. Manuel Stagars Recommended for you. 27:19. Xerocon San Francisco 2016 ... The Blockchain and Us is a documentary film by Manuel Stagars. It gives insight into the global blockchain ecosystem . See more clips on . A documentary film by Manuel Stagars Eric van der Kleij... Luzius Meisser speaks about the early days of Bitcoin and the evolution of a thriving ecosystem in Switzerland, the professionalization of the ICO market, challenges in the foundation model for ... Luzius, Bitcoin Suisse board member and co-founder of the Bitcoin Association of Switzerland, spends some time with me on all things Bitcoin. We discuss the ... "FinTech Made in Switzerland": Interview Luzius Meisser, Bitcoin Association Switzerland - Duration: 27:19. Manuel Stagars 938 views. 27:19. Start-up (2020) - Episode 3 of 3 - Duration: 32:06.

#