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From: Jonathan Levin <jonathan.levin@sant.ox.ac.uk>
To: "bitcoin-development@lists.sourceforge.net"
	<bitcoin-development@lists.sourceforge.net>
Thread-Topic: Economics of information propagation
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Subject: [Bitcoin-development] Economics of information propagation
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Hi all,

I am a post-graduate economist writing a paper on the incentives of =
mining. Even though this issue has been debated in the forums, I think =
it is important to get a sense of the magnitude of the incentives at =
play and determine what implications this has for the transaction fee =
market.

As it has been pointed out before the marginal cost for miners does not =
stem from the private cost of the miner validating the signature and =
including it in the list of transactions in the block but rather the =
increased probability that the block will be orphaned as a result of =
slower propagation. Gavin did some back of the envelope worst case =
calculations but these overstated the effect of propagation delay. The =
reason being the 80ms additional time to reach 50% of the network is =
spread throughout the time that it takes to reach 50% of the network. =
During this time miners are notified about the block and treat it as the =
longest chain and hence are no longer mining with the aim to produce a =
competing block.=20

I am looking to calculate the change in the curvature of the probability =
mass function that a block hears about my block in any given second as a =
function of the block size. Although there is likely to be significant =
noise here, there seems to be some stable linear relationships with the =
time that it takes to reach different quartiles. Has anyone done this? I =
have used some empirical data that I am happy to share but ideally I =
would like analytical solutions.

Following Peter Todd, I also find the concerning result that propagation =
delays results in increasing returns to higher shares of the hashing =
power. Indeed it may well be in the interest of large pools to publish =
large blocks to increase propagation delays on the network which would =
increase orphan rates particularly for small miners and miners that have =
not invested in sufficient bandwidth / connectivity. If a small miner =
hears about a block after 4.5 seconds on average there is a 0.7% chance =
that there is already a block in circulation.  Large miners can increase =
the time that it takes for small miners to hear about blocks by =
increasing the size of their blocks. For example if the time that it =
takes for a small miner to hear about the block goes to 12 seconds there =
is a 2 percent chance there is already a block in circulation for the =
small miner. There is also a 1.2% chance that there will be a competing =
block published after a small miner propagates in the time that it gets =
to full propagation. Am I getting this right that the probability of a =
miner=92s block being orphaned is comprised of the probability that the =
miner was not the first to find a valid block and the probability that =
given they are first, someone else in the absence of hearing about it =
finds a competing valid block.=20

One question is: Are orphans probabilistic and only resolved after =
hearing about a new block that lengthens the chain or is there a way to =
know in advance? Is it frowned upon to mine on top of a block that you =
have just found even though it is very likely going to end up an orphan?

Would be happy to share the draft form of the paper and receive any =
feedback.

Finally, at coinometrics we are working on a modified client to capture =
information on network propagation and would invite any suggestions of =
any other useful statistics that would be useful in the development of =
software.=20

Best,

Jonathan










On 21 Apr 2014, at 01:16, =
<bitcoin-development-request@lists.sourceforge.net> =
<bitcoin-development-request@lists.sourceforge.net> wrote:

> Send Bitcoin-development mailing list submissions to
> 	bitcoin-development@lists.sourceforge.net
>=20
> To subscribe or unsubscribe via the World Wide Web, visit
> 	https://lists.sourceforge.net/lists/listinfo/bitcoin-development
> or, via email, send a message with subject or body 'help' to
> 	bitcoin-development-request@lists.sourceforge.net
>=20
> You can reach the person managing the list at
> 	bitcoin-development-owner@lists.sourceforge.net
>=20
> When replying, please edit your Subject line so it is more specific
> than "Re: Contents of Bitcoin-development digest..."
>=20
>=20
> Today's Topics:
>=20
>   1. Re: "bits": Unit of account (Oliver Egginger)
>   2. Re: "bits": Unit of account (Christophe Biocca)
>   3. Re: "bits": Unit of account (Gmail)
>   4. Re: "bits": Unit of account (Mike Caldwell)
>   5. Re: "bits": Unit of account (Justin A)
>=20
>=20
> ----------------------------------------------------------------------
>=20
> Message: 1
> Date: Sun, 20 Apr 2014 20:43:24 +0200
> From: Oliver Egginger <bitcoin@olivere.de>
> Subject: Re: [Bitcoin-development] "bits": Unit of account
> To: Bitcoin Development <bitcoin-development@lists.sourceforge.net>
> Message-ID: <5354154C.1080908@olivere.de>
> Content-Type: text/plain; charset=3DISO-8859-1
>=20
> Hello,
>=20
> just my two 'cents':
>=20
> Terms arises by itself. Just as most people speak of coins when they
> mean bitcoins. I do not see that bitcoin is currently in common use
> except for speculation. Therefore no term for smaller units has
> established yet. No problem in my eyes. Time will tell.
>=20
> - oliver
>=20
>=20
>=20
>=20
> ------------------------------
>=20
> Message: 2
> Date: Sun, 20 Apr 2014 15:19:38 -0400
> From: Christophe Biocca <christophe.biocca@gmail.com>
> Subject: Re: [Bitcoin-development] "bits": Unit of account
> To: Bitcoin Development <bitcoin-development@lists.sourceforge.net>
> Message-ID:
> 	=
<CANOOu=3D9=3DTAnaCuyh_P2GqHaguyY39xjhj84HSA_x+6F4MOqM_A@mail.gmail.com>
> Content-Type: text/plain; charset=3DUTF-8
>=20
> Culturally neutral? "bit" in French phonetically collides with slang
> for phallus ("bitte", with a silent "e"). Apparently it means "louse"
> in Turkish as well.
>=20
> Not that this really would be avoidable with any short word (all the
> short possible words are usually taken), but it's not neutral.
>=20
> On Sun, Apr 20, 2014 at 2:43 PM, Oliver Egginger <bitcoin@olivere.de> =
wrote:
>> Hello,
>>=20
>> just my two 'cents':
>>=20
>> Terms arises by itself. Just as most people speak of coins when they
>> mean bitcoins. I do not see that bitcoin is currently in common use
>> except for speculation. Therefore no term for smaller units has
>> established yet. No problem in my eyes. Time will tell.
>>=20
>> - oliver
>>=20
>>=20
>> =
--------------------------------------------------------------------------=
----
>> Learn Graph Databases - Download FREE O'Reilly Book
>> "Graph Databases" is the definitive new guide to graph databases and =
their
>> applications. Written by three acclaimed leaders in the field,
>> this first edition is now available. Download your free book today!
>> http://p.sf.net/sfu/NeoTech
>> _______________________________________________
>> Bitcoin-development mailing list
>> Bitcoin-development@lists.sourceforge.net
>> https://lists.sourceforge.net/lists/listinfo/bitcoin-development
>=20
>=20
>=20
> ------------------------------
>=20
> Message: 3
> Date: Sun, 20 Apr 2014 14:32:26 -0500
> From: Gmail <will.yager@gmail.com>
> Subject: Re: [Bitcoin-development] "bits": Unit of account
> Cc: Bitcoin Development <bitcoin-development@lists.sourceforge.net>
> Message-ID: <B687D4AD-263F-4594-BE7A-FF238B8DF7AF@gmail.com>
> Content-Type: text/plain; charset=3D"us-ascii"
>=20
> People in the Bitcoin community are sometimes resistant to the idea of =
using the word "credit" as a unit of Bitcoin, because Bitcoin is not a =
credit-based system.=20
>=20
> However, given that the average person has close to no understanding =
of what "credit" means, and probably no concern for the distinction even =
if they do know, it may be wise to use the futuristic and easily =
understandable "credit" as our human-friendly unit.=20
>=20
> Do others agree that "credits" as a unit of account has a desirable =
futuristic connotation?
>=20
> Will
>=20
> -------------- next part --------------
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>=20
> ------------------------------
>=20
> Message: 4
> Date: Sun, 20 Apr 2014 16:28:34 -0400
> From: Mike Caldwell <mcaldwell@swipeclock.com>
> Subject: Re: [Bitcoin-development] "bits": Unit of account
> To: Christophe Biocca <christophe.biocca@gmail.com>
> Cc: Bitcoin Development <bitcoin-development@lists.sourceforge.net>
> Message-ID: <4098C706-D67F-474E-9C13-E4C8F56B41ED@swipeclock.com>
> Content-Type: text/plain; charset=3D"us-ascii"
>=20
> By culturally neutral I mean we avoid deliberately invoking a cultural =
reference in the name.  For example "satoshi" would be a reference to =
Japanese culture just for being a common Japanese name regardless of who =
Satoshi turns out to be.=20
>=20
> Mike
>=20
> Sent from my iPhone
>=20
>> On Apr 20, 2014, at 1:20 PM, "Christophe Biocca" =
<christophe.biocca@gmail.com> wrote:
>>=20
>> Culturally neutral? "bit" in French phonetically collides with slang
>> for phallus ("bitte", with a silent "e"). Apparently it means "louse"
>> in Turkish as well.
>>=20
>> Not that this really would be avoidable with any short word (all the
>> short possible words are usually taken), but it's not neutral.
>>=20
>>> On Sun, Apr 20, 2014 at 2:43 PM, Oliver Egginger =
<bitcoin@olivere.de> wrote:
>>> Hello,
>>>=20
>>> just my two 'cents':
>>>=20
>>> Terms arises by itself. Just as most people speak of coins when they
>>> mean bitcoins. I do not see that bitcoin is currently in common use
>>> except for speculation. Therefore no term for smaller units has
>>> established yet. No problem in my eyes. Time will tell.
>>>=20
>>> - oliver
>>>=20
>>>=20
>>> =
--------------------------------------------------------------------------=
----
>>> Learn Graph Databases - Download FREE O'Reilly Book
>>> "Graph Databases" is the definitive new guide to graph databases and =
their
>>> applications. Written by three acclaimed leaders in the field,
>>> this first edition is now available. Download your free book today!
>>> http://p.sf.net/sfu/NeoTech
>>> _______________________________________________
>>> Bitcoin-development mailing list
>>> Bitcoin-development@lists.sourceforge.net
>>> https://lists.sourceforge.net/lists/listinfo/bitcoin-development
>>=20
>> =
--------------------------------------------------------------------------=
----
>> Learn Graph Databases - Download FREE O'Reilly Book
>> "Graph Databases" is the definitive new guide to graph databases and =
their
>> applications. Written by three acclaimed leaders in the field,
>> this first edition is now available. Download your free book today!
>> http://p.sf.net/sfu/NeoTech
>> _______________________________________________
>> Bitcoin-development mailing list
>> Bitcoin-development@lists.sourceforge.net
>> https://lists.sourceforge.net/lists/listinfo/bitcoin-development
>=20
>=20
>=20
> ------------------------------
>=20
> Message: 5
> Date: Sun, 20 Apr 2014 20:16:35 -0400
> From: Justin A <allport@gmail.com>
> Subject: Re: [Bitcoin-development] "bits": Unit of account
> To: Mike Caldwell <mcaldwell@swipeclock.com>
> Cc: Bitcoin Development <bitcoin-development@lists.sourceforge.net>
> Message-ID:
> 	=
<CAK2MuX3GufxU_AH0Kaw3pUkzgX_agok86ahCh+7r96UkxZwneQ@mail.gmail.com>
> Content-Type: text/plain; charset=3D"utf-8"
>=20
> <delurk>
>=20
> What about "ubit", pronounced "YOU-bit", representing 1e-6 bitcoin? =
Easy to
> say, tied in a visual way to the metric micro, leaves the required 2
> decimal places for the marginally numerate.. What more could one want?
>=20
> </delurk>
>=20
> Also, hi. My first post; plan to get involved over the southern =
hemisphere
> winter if I can learn enough.
> On Apr 20, 2014 4:32 PM, "Mike Caldwell" <mcaldwell@swipeclock.com> =
wrote:
>=20
>> By culturally neutral I mean we avoid deliberately invoking a =
cultural
>> reference in the name.  For example "satoshi" would be a reference to
>> Japanese culture just for being a common Japanese name regardless of =
who
>> Satoshi turns out to be.
>>=20
>> Mike
>>=20
>> Sent from my iPhone
>>=20
>>> On Apr 20, 2014, at 1:20 PM, "Christophe Biocca" <
>> christophe.biocca@gmail.com> wrote:
>>>=20
>>> Culturally neutral? "bit" in French phonetically collides with slang
>>> for phallus ("bitte", with a silent "e"). Apparently it means =
"louse"
>>> in Turkish as well.
>>>=20
>>> Not that this really would be avoidable with any short word (all the
>>> short possible words are usually taken), but it's not neutral.
>>>=20
>>>> On Sun, Apr 20, 2014 at 2:43 PM, Oliver Egginger =
<bitcoin@olivere.de>
>> wrote:
>>>> Hello,
>>>>=20
>>>> just my two 'cents':
>>>>=20
>>>> Terms arises by itself. Just as most people speak of coins when =
they
>>>> mean bitcoins. I do not see that bitcoin is currently in common use
>>>> except for speculation. Therefore no term for smaller units has
>>>> established yet. No problem in my eyes. Time will tell.
>>>>=20
>>>> - oliver
>>>>=20
>>>>=20
>>>>=20
>> =
--------------------------------------------------------------------------=
----
>>>> Learn Graph Databases - Download FREE O'Reilly Book
>>>> "Graph Databases" is the definitive new guide to graph databases =
and
>> their
>>>> applications. Written by three acclaimed leaders in the field,
>>>> this first edition is now available. Download your free book today!
>>>> http://p.sf.net/sfu/NeoTech
>>>> _______________________________________________
>>>> Bitcoin-development mailing list
>>>> Bitcoin-development@lists.sourceforge.net
>>>> https://lists.sourceforge.net/lists/listinfo/bitcoin-development
>>>=20
>>>=20
>> =
--------------------------------------------------------------------------=
----
>>> Learn Graph Databases - Download FREE O'Reilly Book
>>> "Graph Databases" is the definitive new guide to graph databases and
>> their
>>> applications. Written by three acclaimed leaders in the field,
>>> this first edition is now available. Download your free book today!
>>> http://p.sf.net/sfu/NeoTech
>>> _______________________________________________
>>> Bitcoin-development mailing list
>>> Bitcoin-development@lists.sourceforge.net
>>> https://lists.sourceforge.net/lists/listinfo/bitcoin-development
>>=20
>>=20
>> =
--------------------------------------------------------------------------=
----
>> Learn Graph Databases - Download FREE O'Reilly Book
>> "Graph Databases" is the definitive new guide to graph databases and =
their
>> applications. Written by three acclaimed leaders in the field,
>> this first edition is now available. Download your free book today!
>> http://p.sf.net/sfu/NeoTech
>> _______________________________________________
>> Bitcoin-development mailing list
>> Bitcoin-development@lists.sourceforge.net
>> https://lists.sourceforge.net/lists/listinfo/bitcoin-development
>>=20
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>=20
> =
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> Bitcoin-development mailing list
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> End of Bitcoin-development Digest, Vol 35, Issue 72
> ***************************************************


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