bitcoin-dev

[BUG]: Bitcoin blockspace price discrimination put simple transactions at disadvantage

[BUG]: Bitcoin blockspace price discrimination put simple transactions at disadvantage

Original Postby Greg Tonoski

Posted on: January 16, 2024 10:40 UTC

Understanding the distinction between Pay to Witness Public Key Hash (P2WPKH) and Pay to Taproot (P2TR) is essential in the realm of Bitcoin transactions.

However, it's important to recognize that the treatment of transactions within a blockchain network does not solely depend on the transaction type but also on other factors such as transaction size and fees.

Transactions are prioritized based on various attributes, with transaction size and associated fees playing significant roles. A large, complex transaction—often referred to as a "bloated" transaction—may receive higher priority over several smaller, simpler transactions even if they cumulatively match the former's size and fees. This prioritization occurs irrespective of whether the transactions are P2WPKH or P2TR.

The transaction type itself, whether P2WPKH or P2TR, represents different mechanisms for securing Bitcoin transactions. P2WPKH is part of the Segregated Witness (SegWit) improvement, which was designed to increase block capacity and improve transaction malleability by separating the witness from the list of inputs. On the other hand, P2TR refers to Taproot, a relatively newer upgrade that enhances privacy and efficiency, particularly for complex transactions involving smart contracts.

While both transaction types contribute to the evolution of blockchain technology and have their specific use cases and benefits, their nature and structure do not directly impact how individual transactions are prioritized within the network. Instead, it is the interplay of transaction size and fee that determines priority, demonstrating the complexity of transaction processing in blockchain networks.