There is an air of oppression that lifted in the Bitcoin Cash ranks. This is still something we are getting used to, but the change is clear and the benefits are slowly being realized.
We used to live with the people that want to forever have 1MB blocks and are still fighting against even a little increase on the SegWit2X chain. Those people were toxic, yes. But what is more important is that their ways of thinking affected everything about Bitcoin, and many times not for the better.
I want to address one item that used to be like scripture. Taboo to discuss and change. Even though it requires no end user to update his software.
Transactions are picked by the miners currently based on the amount of fees they pay. Zero-fee transactions have been seen as people taking advantage of the system for some time. And I think its time to look at this and find out if that actually makes sense.
I want to propose that miners start to prioritize transactions based on the properties of the individual transaction. The higher the priority, the better chance of inclusion in the next block. The factors of giving priority are;
- Coin-age of spent coin (days-destroyed). Older is better.
- Ratio of inputs to outputs in one transaction. More inputs is better.
- Sigops count. Less is better.
- Transaction size in bytes. Smaller is better.
- Fees paid to the miner.
This change essentially means that if your transaction scores high in any of the first items, that means the fee you need to pay to get mined goes down.
The reason we have been told fees were good is because they would protect us against spam attacks.
And I see that need, if we drop fees then people could create many many transactions with the effect that if I went and tried to pay my beer in the pub, it would not go through. We can’t ignore that threat.
I would argue that this problem can be solved much better with “Coin Age”. Money I received a month ago would have a higher priority to be mined. This makes sense because it rate-limits the “spammer” to one transaction a month if his goal is to stop me from being able to spend my money. So the longer a coin is untouched, the higher priority it gets.
If a spammer spends tons of 10 minute old coins, it would have no effect on real uses transactions that in general are quite a bit older.
Point 2 is a bit more complex.
A transaction that has outputs consumes space in the UTXO (unspent transaction output) database. Its inputs remove rows in that database. So stating we prefer a ratio where the database gets smaller is a good idea. Especially if that means people can pay a lower fee to get their transaction mined.
But that is not the full story.
Imagine how a mining pool, or even Yours is handling transactions. There are a lot of people paying very small amounts to a single person. Each payment to you is added to your balance, but on the blockchain you have hundreds of inputs to sign in order to move that money afterwards. At some point creation of a single output is useless because it would be too expensive to spend it later (due to fees).
With point 2 giving a higher priority the natural consequence is that spending those hundreds of tiny transactions you received requires a much lower fee. And this brings into question the setting of the ‘dust limit’.
We can probably significantly lower the dust limit when its no longer a problem to spend inputs that are not holding a lot of value each individually.
How do you see this priority table? Is it better than the current one that only looks at fees?