Combined summary - Addressing the possibility of profitable fee manipulation attacks

Combined summary - Addressing the possibility of profitable fee manipulation attacks

The recent analysis of Bitcoin's network activity indicates that the blockchain is functioning without any apparent manipulation in block space bidding.

The high demand for block space is noted, and it is explained that identifying transactions from a single individual based on fee rates and timing is unreliable due to the use of services like unisat for deploying and minting BRC20 tokens. These services can make multiple transactions appear as if they come from one source. In terms of technical performance, Initial Block Download (IBD) seems to go smoothly on machines equipped with sufficient RAM, although no specific benchmarking data is provided to compare current IBD times with previous ones when less dbcache was used. It is also mentioned that the number of full nodes has increased over the past year.

A separate point of discussion raises concerns about the potential for collusion among blockchain miners and the associated stability of such arrangements. Miners are incentivized to defect from collusive agreements to maximize their profits by underreporting their actual hashrate and secretly mining through another pool. This leads to expectations that more miners will resort to such strategies over time, thus undermining the collective effort and reducing the number of miners involved in collusion.

The conversation turns to critique the effectiveness of fee-burning solutions and suggests that Replace-by-Fee (RBF) could be a better alternative than Child-Pays-For-Parent (CPFP). BitPay is criticized for its payment processing service, with speculation about its possible motives relating to block size debates in blockchain networks. Furthermore, the practice of certain mining pools filtering out low-fee transactions could unintentionally support network flooding strategies that increase transaction fees. For those interested in delving deeper into these topics, a link to Peter Todd's website is shared, along with his email address for further communication after removing the last character.

Finally, there's a detailed observation of patterns in Bitcoin's transaction fees and mempool size that suggest potential strategic manipulations, specifically related to ordinal and BRC-20 token transactions. An alarming increase in UTXOs over seven months has expanded the chainstate database significantly, which could be attributed to small, high-fee transaction bursts during low-volume periods. Evidence from hints at the possibility that these are deliberate to keep blocks full and prevent the mempool from clearing. While this might be part of token minting activities, it raises suspicions about whether it is an attack on Bitcoin's fee structure. The profitability of such an attack would largely depend on miner participation, transaction volume, and costs. The higher the miner involvement, the cheaper the attack, as they would reclaim the transaction fees. This kind of manipulation could affect wallets' fee estimation algorithms, causing users to overpay based on inflated historical fee data. Despite these speculative patterns, concrete evidence of malicious intent remains unconfirmed.

Discussion History

December 17, 2023 11:11 UTC
December 17, 2023 17:56 UTC
December 18, 2023 00:30 UTC
December 18, 2023 06:26 UTC