Gavin Andresen - 2013-11-20 06:42:38

DeathAndTaxes: I'm normally impressed with your posts, but I think you've got some details wrong.

First, RE: the orphan cost of transactions:  Decker/Wattenhofer measured 80ms for a 1K bigger block. The math to compute orphan cost is:
Plugging in 25 XBT block reward, 600 target time, 0.08 delta time, and assuming no fees (to make the math easier):

So 3.3 millies per kilobyte is the orphan cost.

Even if we assume Decker/Wattenhofer are off by a factor of two (we have made some improvements since they measured block propagation; better measurements welcome), default transaction fees (1 to 5 millies per kilobyte) are in the right ballpark to minimize orphan costs. the .1 default transaction fee does not come close to covering the orphan cost (edited: thanks foxpup).

It should be fairly easy to get about another factor of about 10-20 reduction in orphan costs. And as I said in another thread, if EVERYBODY produces larger blocks then EVERYBODY bears the increased orphan cost, and the result is better for everybody . There is a fixed number of new bitcoins to be earned, regardless of the orphan rate; everybody's share of that fixed number will be the same if everybody has a slightly higher orphan block rate. But everybody will earn more fees, and their bitcoins will be worth more because bitcoins will be more useful.