EB49 – Meni Rosenfeld: Mining Pool Reward Systems, Bitcoin Economics, Bitcoin in Israel

Transcript

‏hello welcome to eper bitcoin the show talks about the technologies projects and startups driving decentralization and the global cryptocurrency revolution my name is sebastian and my name is brian we here today with rosenfeld he's the chairman of the israeli bitcoin association and he is kind of a very long standing member of the bitcoin community i'm really excited to this episode today i remember at my i think first bitcoin conference ‏i went to dinner with many rosenfeld and adam back which was pretty great think they both to tremendously smart and knowledgeable people bitcoin so was a great way to like hear all these have a lot of

interesting conversations been since we started this podcast i always wanted to have many on at some point so excited that's happening now and there was a lot of really interesting topics get to talk about thanks for joining us today sure no problem gl to be here ‏so we g a about mining today lot of work with mining pools especially kind of the thinking through the fundamental theoretical aspects game theoretic aspects of that also talk israel work perhaps can you give

introduction background ‏so said my name is man rosenfeld so i'm i live in israel i was born in haa and i studied for a masters degree in mathematics in the whitman institute of science i did work on machine learning specifically supervised learning under the supervision of dr b nadler and after i finished my degree i started working as the head of algorithms research in a startup company called similar web ‏involved anal web traffic figuring out webs similar to others and offering

analy platform to analyzing the traffic that each website gets so i started working in simil we in august 2009 and about a year and half later in march 2011 i bitcoin ‏take a lot of time since the moment i heard about bitcoin until i was no longer the head of research similar web so yes once i heard about bitcoin you know like all of us in seconds or days no it was it was a process but let's put it this way you know so of course when

i bitcoin of weeks ‏all of us started reading about it a we later created in in the bitcoin talk for which then was not yet called bitcoin talk but it was and i think still is the major form for bitcoin in the world so i started writing of course learned much more bitcoin in the process so you know you know even in the beginning ‏apr

later what could do bit successful eas to bu and bitcoins adoption will ‏accepting bitcoin but wor that maybe they won have anything to do with those bitcoins so i wanted them to have the option to sell bitcoins if they choose so bitpay payment processor well yeah i mean yes okay actually maybe a more

advan because you know bit is good with you know the integration making ‏se you know making se ied the option to be out so so that people will know that bitcoins are valuable that they are not stuck with some play money that nobody will want to see that yeah there is act value bit they can sell it any time and actually the fact that they can sell can make them less ‏r bitot pot need to rid so so so by the middle of april

2011 figured out let let's do this you know i didn't know anything about starting a business i didn't ask anyone you know said matha do software develop ‏you know i did i do it as a hobby but not really anything professional so you know i wanted to create a website for this service so you know i learned the php that i need in order to do this and you know didn't ask anyone just register the domain put up a site and posted on the bitcoin talk forum yeah ok i'm buying bitcoins in israel you know come come and see me so

what was called ‏oh yes so this service was called bitcoin which is like you know like play ons it's bitcoin but with the tld of israel so yes so you know so ever since i started it i had some interesting stories but the point is that that was the you know my first activity in bitcoin in israel and maybe i'll take ‏take us a few weeks earli which happened maybe one or two weeks after i heard about bitcoin which we talk about much more later which is

min reward methods back then yeah i don't let's talk about this more a bit later but the first thing i did was develop a new reward method for mining pools and later on started bitcoin and ‏let see and you know in the beginning i didn't know who else is involved bitcoin so you know i i looked around i didn't see anyone in israel doing anything with bitcoin not completely accurate there some people who did something but nothing very

serious you know so eventually i realized that ‏the in israel bitcoin ser really projects with it and yes so this you know back then you know bit i was involved in the community in in bit we also had you know facebook bitcoin we a ‏was the bit conference ever was in new york so i don't remember when exactly i

first heard about it but i think that when i did i thought what this do yk isra may know ‏i and i is the bit event in the have to so you know so really first i did all the preparations to travel and i went to conference and it was really great you know that we need like that in isra so

on our facebook page i announced that we going to do meetup ‏and you know so location people rvp but event only showed up which is me and ron gross which was also very active in the bit community in israel and another guy is is not very active in bitcoin so that was the first bit is ‏like to because it much more since so you know speaking about meet specifically afterwards we had meetups

with 10 people 20 people by january 2013 there was a big growth in bitcoin around the world but especially in israel so we had a meet up with 120 people later we had meet with in february 2014 we had the first bit conference in israel it was a local conference meant just for israelis conducting in hebrew and i think we had maybe 320 people there so that was also very nice and on that note yesterday we finished the first international bitcoin conference

in isra was very nice ‏may 250 i think but you know it was a much more major event it was two days it was international was in a nic ven so talking tel that's so this conference was actually collaboration of the israel bitcoin association and buz productions which is a company here produc conference and media from the bitcoin brand of ‏tak the turn meet to small conference

ev br0 people isend meet number subscribers on when you0 people ‏meet groups where you know they have the number of rsvps and if you don't do anything about after the meet mec shows the number of number

‏the number of people who were actually there of course maybe we mounted a bit maybe five people here and there but that's number that's really impressive doing month so just make people ‏people me conference you know my r of thumb is in conference name tags you know in a conference it's much more you know maybe more formal more more big you know nicer i don't view meetups in the

conference i think what we had in february this that was a conference you know had sponsors and exhibition h ‏all that so yeah so you know but it's semantics eventually so okay now about the frequency of the meetup so in the beginning we had a meetup every two months um now but lately we switch formats you know so we have you know a big conference about every half a year but this by monthly meetups we not doing that instead we are doing ‏by weekly lectures because you know the the meetup

that we had for example in march 2013 with 160 people it was a lot of work to do it was it had lectures it had agenda it has a lot of you know logistics and so on so it was a lot of work to do and we got to the point where we can't dedicate the amount of time needed bring meet high standards ‏so we did you know so we did something which is a bit e so what we are doing now every two weeks we hold the meetup dedicated to one lecture on one specific topic and you know we have a wide variety so sometimes it's more technical sometimes

it's more industry oriented so we really try to have a huge variety of these lectures organ ‏just choose top about it and people show up you we used to doing this of course there is work there but it's much less than organizing bigger meetups so this is something we can have a regular schedule of once weeks and so i imagine doing in tel av yeah indeed so we have actually there is ‏yeah you know

so so you know usually you know israel in is a pretty small country so yes people from all the country can make it to tel aviv but you know so for example if you have major cities which are relatively close to tel aviv such as or jerusalem easier for people to come there eh you go a bit f than that ‏people usually will not travel all the way unless it's a really big meetup so yeah you know and we are seeing an increase activity in in other major cities i mean most most of the bitcoin activity in israel is done in tel aviv

but we're seeing more activity in h and jerusalem we we had a meetup in in the techni on university in h and and we are working now organizing meetup in the hebrew university in jerusalem ‏so most in tel av ou touching on israel landscape and not to stay on this topic too long we have much more inter things to talk about what is sort of the regulatory environment like israel and i think you had experience because serv [מוזיקה]

bitel ‏by the way i agre we should spend too much time on this topic but i do want to say that yes so eventually you know there is a lot of activity that we are doing in in israel and eventually we decided where we is mostly ron gross and i to you know to make it more formal to make it larger and more scalable and that's when we formed the israel bitcoin association ‏is know register goals one of them educa people bitcoin is what we do with all the

lectures by the way every lecture that doing we recording to our youtube channel most of it is in hebrew so not going to ‏isra we exeter adam back and on there we have a special meetup just for them and we record this lecture so this is all available on the the youtube channel now yes another go what you said which is working with the government and

the authorities to generate more bit regulation the situation right now is ‏noor bitcoin what we in the us that had to about the irs to say about in is off guidelines are statements ex month ago the bank of israel together agen ‏bv you know it created a lot of buz and

now there also lot of buz which is not official the bank of israel is a research paper conducted in cooperation with m of the research of isra ‏mostly explores the potential of bitcoin so so yes so from actual regulators this is the situation that there's nothing basically so banks do whatever they want and what they usually want is not to allow anything to do with bitcoin but this is also starting to change there's one bank which is which is starting to warm up to

bitcoin may even banks so right now know ‏someone bitcoin can he can do it maybe not always e clear but but we can use bit without too much problem and this covers this issue yeah i mean i think it's really it's exciting listening to you to see how fast and how much it gr ‏there is a lot of things going on in israel no one meets a lot of people going to conferences from israel to of bitcoin companies there and it's

interesting to hear from you how such a short time it's come such a long way and also of course congratulations for the work youve done there it's really i think that's one of the things that i find really impressive about you is how like you've done so much work on so many different fronts from like especially like educational activities as well like from ‏ex sure you know usually enjoy this work you know in the beginning you know i thought about it in a business way you know especially regard the work in israel so you know i thought ok i have a bitcoin

business in israel so if i help bitcoin in israel grow my business will be more successful ‏eventually the the banks back then um didn't really allow me to to continue operating and and the running an exchange service wasn't exactly my forest so so that business you know it's no longer active but you know i had some momentum you know i i was doing work on bitcoin in israel up to now so i didn't really see any reason to stop so just doing whatever i did before and ‏know know of mathematics like do

research for opportunity to do research on let on ‏actually earlier reading through the paper that you wrote which is quite a while ago as well about mining reward system it was very interesting read i thought was very well written and understandable as well for someone like me who while i'm an economist not mathematician and i'm also

not familiar with intc of that but you know fairly understandable ‏perhaps before we dive s of in the technic more the work you done a brief introduction to mining pools what they are what the function is and what the role of re systems in that cont sure so so mining pool is basically a group of miners ‏is mining it turns out that small

miners like like a small min equipment try to mine if the mine in on their own they will have a lot of what is called vari for example if i have like i don't know per look at the difficulty and calculate and i will ‏per day for mining i will not actually get so most days i will not get anything at all and very rarely i will hit a jackpot and earn 000 and you know this the way this works which is completely random some un inuitive properties for example people

can have an intuition that if if they haven found anything in a while then ‏they are due to fal so in the in the end it will all even out and it doesn't so you know if you mind for a month and you didn't find anything no one is going to give you back the the work that you lost the work really was lost so this is this is a very very difficult situation and i like to tell the story of how in the in the beginning myself tried m solo ‏it was difficult because you know i i found maybe one block every several days and it kept me up at night i i used to

awake in bed and think did i find the block just now no so was on my mind and so that's why most miners prefer to have you know a steady payout they will receive payment exactly proportional to ‏min in exactly reg on exactly yes so you know you can mathematically calculate exactly how it works out but eventually mining pool can allow you to have a much more steady payment now actually the the larger miner is the

less is affected by this when he solo mining and in a pool ‏that each miner has is if he m with the combined si of the po for example if i have per second and which one per second will have the vari reli one per second which is of much lower so that's you know that's know beginning of the it more compli ‏because the needs to how to split up the rewards this to be not a very trivial

there perhaps we point out there are different types of ways that reward i guess the system that was mostly used few years ago and even now is the paper share so you get paid a certain amount of bitcoin based on your ‏yeah you could that well you know i yeah i guess i should explain first a bit what a share is so you know so the first step in splitting up the rewards is measuring how much work each miner does and this is done using shares so a share is like a smaller block easier

block small miner might never ‏shares impossible to shares do the work to block so when the miner finds a share he submits it to the pool and this proves that he has done work so this is the first step the second step figure out what to do with that so in the paper sh method which not has the most popular is method ‏the po operator simply pays out the miner for every share that the miner finds so this is in theory the best method for the

miner because has no variance at all no risk all very simple just s shares and gets payments very good for the miner however it's not so good for the operator because the operator needs to the miners whether they find blocks or not ‏so if the pool finds a lot of blocks and that's great the operator gets to keep all of the rewards but if the pool finds less than expected blocks then the operator will have will have to pay out out of his own pocket and you can calculate the risk that the operator has and it's a pretty big risk so traditionally pps charged very high fe for the service they have risk they want

to compensate for it so the fees in the pps pool are very high ‏and this this is a problem for the miners so alternative to pps people invented method usually called the proportional method where the basic is that we we look at the time between two blocks being yes ‏let's put it this way the pool has rounds and whenever a block is found a ends and the new round starts

and for every round the the pay the reward for the block that was found at the end of the round is distributed among the people who mind during this round in proportion to the amount of shell submitted may sounds logical at ‏but the problem is is that this method is completely broken because of the infamous problem of pool hopping so a pool hing basically means that in a pool that the proportional method sometimes are better to mind others sometimes when i can mine and the expected amount i will get for every share is more than

than what it should be so what people can do is to min ‏po whenever it's profitable and and when it's not profitable m solo or go to another pool and of course this is at the expense of the continuous miners because there's only a given p and if the h take a bigger portion of it the continuous miners get less so this is a problem that that for a long time has been very poorly understood even when people started to understand the problem ‏it was considered very theoretical no one was people can do it if actually do it there was this time

where someone came forward and admitted yes i ping and this was you know like i don't know shocking but it was like wow there is actually someone hopping ever since then everybody started easy tools that out everybody could use ‏you know this you know for long time people that they could salvage the method somehow but eventually there is that no just broken from the ground up you just need to throw away find a different method and around that time shortly before i

started bitcoin gu ‏invented a different method which was first used by slash which is just call it sl method which you know which has you know it was built in a specific way which resists pull hopping you know i don't want to go all the details but the basic ide value dec over ‏now the block will be in the future i will get much less for it so this was

the right direction to go in but the method wasn't complete it was still some and there are there were it was not very you know mathematically so i i looked at it and know what could be ‏enough thinking i came up with method is completely hing proof and you know it had specific trs but i i believe that you know that hoping hil is the wor could happen

sacrifice performance parameters this is still it you know in the beginning ‏you know i offered this method to slash and heed but he didn't really time to to do anything about it eventually wrote a post about it and a few adopted it and yeah this is this is similar in many ways to slash but just makes a things more accurate and yes back know ‏rese

know that in a way by the way this method was eventually named it the geometric method so i prov that under certain assumptions the geometric method is the only hoping proof method but eventually i came to realize that that this assumptions you know can be relaxed and you can find the methods which are better than geometric method ‏so you know there were a few other methods so right now the the most popular method which is hoping proof is bpl s and yeah that's when i started writing a paper that simply covers all of the different re methods analy

them still useful resource for for all of the classical mining pool methods if sometime i will talk about the ‏the new age of re me so i' like to go into perhaps explain a bit more what the double geographic method is how it works in comparison to the other methods that we described and also talk about general landscape of mining how it's evolving towards sort of more just ‏talk about fair of course fair is

a bitcoin prediction market where you can place predictions on the likelihood of sporting events the bitcoin price or curent affairs and if you bet correctly you earn money and so bri you perhaps explain how bitcoin market works so the main difference between a traditional prediction market and like is take house ‏can more efficient and cheaper fair esp good

volume interes to ‏one so for example there a bet that bit difficulty iser than 75 billion is that billion know i by the end of the year kind take prediction ‏could but you can also say instead of

example mining hardware which in a sense is a bet that difficult not gna rise too much because if it rises too much your hardware lose all value you say i'm gna bet that the difficulty is not gna go too high so you can take against that if you already have hardware is ach ‏pr cases you know prediction market in the br economy economic perspective predictions market are way to for the whole market to get information about specific

things you know re people predictions ‏generates make decisions economy more effectively so we wish fair day most success now specifically you know but in order to really be useful the the thing that you bet on should be actionable so bet on whether the difficulty will be higher or low than some amount i don't think that's a very effective way the information you get from ‏you people need to

decide to invest in equipment not enough for them binary prediction difficult be than that i mean what they want to know is what will be the integral of the ratio between the b infinity ‏to do with pure mining which was the first deterministic mining bond that issued on gls backs was so yes i think there a lot of interesting

things ‏well if you like to bet on on the difficulty level at 75 billion end of the year you can def do that by going to.com epicenter that's f l.com center sign up deposit money and give it a try and we thank fair for support bitcoin absolutely thanks so much now let's back topics su in ‏more mayure bitcoin

mining okay so yes just mention that dgm or double geometric method is one of the meth invented pretty compli so far i any operator man tol ‏you know sitting with them explain exactly what they need to do so you know back at that time i thought that the was worth the effort but right now you know i think we have bigger fish to f and also you know people are using people and and and you know a little knowledge is dangerous so people think that they understand people so they implement the way they think is right and it's not

exactly accurate which used to ‏the right now is mining centralization where if look at myer about re methods i think it was years ag now so know all of ‏you know with methods size does matter the big the bigger pool is the more performance it can offer to its miners

so this causes centralization problem so you know if you have one pool that is slight bigger than the others then all the miners will start fling to it until it gets bigger and bigger and eventually there just the one pool where everyone mines and they are unable to mine anywhere else because all the other ‏so small and offer such bad performance that it simply makes no sense to um to mind they think this is exactly what we saw um with the gigio that reached the majority of the network hash rate a while ago so simply because it was so big every miner which is not completely altruistic simply mine there rather than

any anywhere else because the variance you would have ming for that pool was much ‏slower than other pools so this is a problem all of the classical reward methods have which is now which is why right now i'm focusing more on on new frameworks for reward methods so there are actually two ways to to combat decentralization so one of them which i think i suggested two years ago that miners should mine in multiple simultaneously ‏so for example if there are 10 pools miner split myh rate a little bit in and this is a winwin

situation so for the miner he gets the same performance as if he m a single huge pool with the combined size of all pools and for the network this is much he because the miner maintains the status doesn't give more power to the pool which is already the most powerful but he keeps the same distribution ‏before so can compete on their merits rather than who manage to get bigger sooner so in this way small po will still comp it know if there is small pool people will still not a lot but the will mind so if the can can gr and so this is i think which

is ‏i don't know for i mean back when i suggested it you know a miners they going to do it i think there not enough awareness this is even possible desirable i think the even bigger problem with that is that pools commodity so you know even if someone creates software knows ‏to m in several simultaneously the user can't just tell this client ok mine for 30 best pools and and so on so you know the user

actually has to go to every website and sign up for account and log in and so on yeah ok i just that i forgotten to plug my computer to the power but let's hope that it will ‏l until until the end of the session anyway so so you know so what and you know so if we want to be effective we need to mine in like i don't know 20 30 pools and it's a lot of hle to sign up to alls so i think what we need what we need to make is that po will be more of a commodity so you can have a client that automatically searches for pools

and logs into pools and sends work to pools ‏this is g be the way this problem will be solved solution does make sense to me it makes sense me that this add the mining c over and very much ‏you know until something really wrong happens nobody really sees incentive to do something and i think you have sort

of situation the other the other people probably gna do something really bad i will just stay put and do the easiest convenient thing and this is obviously not it so do you think the mining cal issue ‏split power among many pools or is it gna be something radically different that will address this issue yes so first i want to say one more thing that you know actually you know the what i described just now is simple but you know it's not enough so what i'm mostly advocating

right now is something which i call multi ps which is based on the same idea of mining multiple simultaneously but it's a bit you know ‏once we make it happen it will be much more powerful but it requires more work to do so like i said right now multi pps is what i'm focusing on you know you can currently this method exist mostly as supposed on the bit talk forum so anyone who is interested can look it up so yes so i think you know the important thing is that we don't require miners to be very altruistic right so you know right now ‏when people talk about centralization they maybe suggest to

use p to pool which is great but actually the performance in pet pool isn't so good so miners actually have to sacrifice performance in order to do the right thing of mining with p pool which is which is why i don't think p pool is solution whereas in my in my suggestion then yeah maybe there's a bit more effort where the miner needs to switch to new method but once he does ‏actually gets better performance he does right now so we can we do not have to assume that min altruistic um and so yes so that's about that so i think really this is what mining will look like however it should be emphasized that this only

solves the problem of mining centralization if we have a lot of miners ‏this is really big problem because you know big big companies have aot of overhead i think possible for home miners to comp

‏you know interesting you know cool so also are less risk you know big company doesn't want to l small miner small us take i ‏h can centralization so you think there is a future for home mining for individual miners just maybe some economic downsides they have in terms of having smaller

scale maybe not professional cooling facilities etc will be out by other advantages they have in ‏perhaps free electricity using using sort of heat generated from el there are lot of options there i mean yes for ex specially users that in cold countries they might have you know they can savage instead of normal ‏i think we will combination of you know

hug mining farms which are built in places which are electricity have you know small businesses do mining enjoy econ over ‏also have small min so all of will together so i don't think any one entity will reach a huge percentage of the network when i first getting involved in bitcoin i guess my idea of mining the obvious scenario for the future was that every internet connected

device every potentially device connect internet would be able to do mining ‏you order need efficient for the bit ‏cp the of cpu that you in cell i think it will be very good for

this purpose so i don't see a future where every device will m but i do miners will just plug in you know a card to the to the computer will be for this purp ‏hello hello los i think we l think battery that's

ok split ‏you video vi [מוזיקה] [מוזיקה] yes ok so are ‏the 50 minutes so i think we can move on to the economics

afterwards we waiting j maybe you can pull one of music videos ‏more minutes rec i hope not don't think so i think think will

per ‏ok perfect great so let's kind move on from the mining topic to topic really related to this and which is bitcoin economics and sort of economic viability of bitcoin when we talk about the long term and of course that does tie in at least to some extent to economics of mining to per seg ‏block si

economics argument block si kept lim meg of that ‏li supply drive up transaction fees and drive up r for miners and i guess his idea is that this would be a way to ensure miners have enough incen to keep running their hardware have network

‏will create a problem in the long term so what are your thoughts on this issue okay so i have a few things to say about that maybe we start with you know you started by mentioning i analysis was very ‏doesn't you know really consider all of the issues here so you know i want to maybe start with something that okay maybe i'll briefly repeat the problem if we remove all limits on the block then you know the the marginal cost of adding a transection to this a block will be close to zero so miners will have an

incentive to just include every transaction but if they include every transaction then no user will want to pay ‏signs any this isy of actually kind of reverse logic because in this case if miners monopoly usually we think of a monopoly a bad thing in this case monopoly would be a solution to this problem mon monolithic could ‏to if you have many independent miners even if the best thing for the miners

and for the bitcoin network is that the fe will be low but significant then the miner to maximize his own profit will accept transactions which have insignificant fees and this is a problem and right not a because there is limit on the block size ‏rem that it will be so the solution that gin has suggested mentioned in his post is is assurance contracts i don't really believe in this solution in theory it doesn't really work because whatever the situation is

totes more required support the network then no user will actually have an incentive toge ‏you know he would much rather have other people pay and he won't pay and if we don't have enough pledges then the fact that the minor play just will not help because is one just one part in the whole group so you know so i don't think ass contacts have a strong theory behind them and i also don't i think they have a strong empirical support for them because you know mentioned the example of kickstarter which which is of course ‏pretty successful platform but you know there so

first people are not being completely altruistic i mean they do get some benefits from pledging to kickstarter you know for the pledge itself not just the completion of the project but they have this perks so maybe maybe they pledge to do this and also the amounts are low enough that you know the the user can just say what the heck throw in but ‏you know so when talking about incen miners to sec network we talking about much bigger amount this is place where we can people altruism so not a big believer in assurance contract

solution for you know block limit you know solu ‏meg meg meg but i don't think the block size limit is a solution to incen miners because it creates per incentives what block limit does is you know encouraging people to have transactions which physically smaller and has nothing to do ‏issue of incen

miners because miners just hash the difficulty of the hashing has nothing to do with with the physical data size of the transactions so this is you know this is a baring problem between the miners and the users let let's assume for this discussion that um that miners are a monolithic entity so the min say to the user i can include transaction it does ‏cost me anything but you know but you want me to do it so i want you to pay me for doing service for you so you know there's a lot of theory about bargaining and sh values and so on but the the main point is that we should take whatever is

the value of the transaction for for the user and the fe should be about half of that you know don't to go all the details but the amount of fe that the ‏dep on how he enter the block and again has nothing to do with the data size of the transaction so of course the problem is that we don't know what is the the value of the transaction for the user and we don't want to ‏yeah this is true and and i don't

want to enter actual verbal bargaining for each such transaction however i do believe that the you know the amount of bitcoin sent in the transaction is a pretty good proxy i mean it's of course not accurate at all but i think that um you know someone you know in in quanti not in you know emotional matters me ‏if if i send someone a bitcoin maybe emotionally this transaction means a lot to me but you know if probably means that you know economically it's not very important so i think someone who sends a million bitcoins will probably be

willing to pay higher fees than someone who sends a mil bitcoin so i think that the value of the transaction the is a good proxy to you know how much this transaction is worth which is why i think ‏oky over saying that never

‏to a few more things that so yeah i think when we talk about a percentage amount then you know it also depends how much we talking about exactly right so sebastian mentioned that right now we pay very high fees so you know we can pay a percentage which is not very me what i have in mind may even ‏that so it would be better should also add that you know something which is like that but is a bit different is to if now we have a cap on the amount of data that go into block i think we could also have a cap on the amount of value transfer in

the block of course it will have to be fairly large amount but what will happen if we this ‏automatic for every transaction the min wants to put into the block then he knows that on one hand he get some fee and other hand it cost him some space in the block so the equilibrium here is that there will be a percentage fee so you know we could either have you know hard coded transaction part of the protocol ‏we can have a cap on the block size you know will in

similars but you know the block size is maybe a bit more dynamic we don't really have to set the exact fe we the miners deci the users how much worth it for them so how do you think that would happen would be some sort of ‏bits block block si already disc any this

is you know you know in of ‏sy of dollars you know i think eventually you know i think we need to start warming up su because you know this will be relevant years from now the new bit willow now don't have worry ‏min bul i more than enough incen miners so

this is a problem for may 10 years from now so i think we should right now start the dialog about this and maybe eventually you know start thinking about making this change you know so for example you actually you if the same applies to several issues for example if you look at the cost of transaction ‏it has several factors you have the cost of storing it and propagating it and if we want to keep this down we need to put cap on the data data of the block there also the cost for the no to

verify the signatures cpu c now is not can know ‏physic requires a lot of signatures verify so this also has a cost and it's not considered right now so i think we should add either a cap on the amount of computations for the block or maybe hardcoded fe per computation and things rel to the cost of and have the ‏we

of fix percentage value so i think are big changes and and not discussed very much right now i think the whole discussion about transaction fe is mostly very naive think you know in order ‏some normal we have aot of experience with operating bitcoin scale similar to credit card transaction network we have very little experience

actually running ‏you know i think both theory and practice have the i mean we will be much wiser when we have much more emp experience however we should wait to have experience i think we research ‏on bitcoin you know a lot of the research being done is is very good and it highlights very real issues so i

think we should you know we should do both i mean you shouldn't just wait we should actually you know tle this problems and you know first understand the problem then offer all the possible solutions then choose the best solution and i really hope that whatever the best solution is it will be eventually make ‏into bitcoin because i would much rather have bitcoin succeed than other alt i think that the people who invested in bitcoin early on should you know gain a return on their investment all contribution to the success of cryptocurrencies and think you know ultimately the power to change bitcoin

is in the hands of the users will beart to age toes help bitcoin ‏sc up in the [מוזיקה] future exactly many thanks so much for joining us today thanks for diving into these issues now we talked about quite a few things from israeli bitcoin association to the meetup etc we will link to those in the show notes so if you wann read about on system ‏i just i also really enjoy talking

about these things we don't really get to talk about really go in depth and technical topics very often i br know you agree especially lately and it was interesting the research for i guess perhaps realize that ‏these topics not very fluent in them so personally i it was very enriching to do the research and then have you want to discuss them absolutely and and i think very right in pointing out that these are issues that sort of far away because we have this block reward because at the moment bitcoin is barely used

economically right few people actually using it to pay for things so these are all of issues that ‏challeng in eyes will the solu will cons ‏aware ehm so ja wel thanks so much for joining

us en now also eh we have another hangout coming up next week and that is on e like 1800 utc so 6 pm utc i don't know what that is in time zones actually used eh it ‏talking guys thanks for inviting me thank you so much so the hang next tues no on wednesday october 29 we have david johnson on from angel master coin talk to him about his activities and thanks you listeners thanks so much

for listening you can follow us on twitter btc don ‏tips and you can also leave us itunes which we appreciate helps new people find the show thanks so much and we be back next week