bitcoin-dev

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

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

Original Postby Nagaev Boris

Posted on: January 16, 2024 23:29 UTC

In the realm of blockchain technology, node operators play a crucial role in maintaining the network's integrity and efficiency.

A common practice among these operators is to allocate the UTXO (Unspent Transaction Output) set to Solid State Drives (SSD) while storing blocks on Hard Disk Drives (HDD). This decision is influenced by the cost differential between SSDs and HDDs, given that SSDs are significantly more expensive. The architecture of blockchain incentivizes users to store data primarily as witness data on HDDs, which is financially more viable.

However, an imbalance arises if miners were to charge uniformly for storing one byte of data in transaction outputs as they do for one byte in witness data. Such parity in pricing could lead to users opting to store their data in transaction outputs instead of witness data. This trend would inadvertently cause an inflation of the UTXO set size, thereby forcing node operators to invest in larger and more costly SSDs to accommodate the growing dataset.

From the standpoint of a node operator, the current structure, which seemingly differentiates between the costs associated with storing transaction output data and witness data, is preferable. This preference stems from a desire to avoid unnecessary financial burdens that could result from an inflated UTXO set requiring additional SSD storage capacity. Maintaining this distinction is crucial in preserving the economic balance and operational efficiency for node operators within the blockchain ecosystem.