[Bug]: Blockspace price shouldn't be higher for a simple transaction (price discrimination against simple txs) #29146

Is there an existing issue for this?

• I have searched the existing issues

Current behaviour

Blockspace price for data of a simple transaction is higher than the one for data of other ("complex") transactions, e.g. 3=616 weight / 205 bytes aabbcce67f2aa71932f789cac5468d39e3d2224d8bebb7ca2c3bf8c41d567cdd vs 1.49=1140 weight / 767 bytes 1c35521798dde4d1621e9aa5a3bacac03100fca40b6fb99be546ec50c1bcbd4a.

As a result, there are incentives distorted and critical inefficiencies/vulnerabilities (e.g. misallocation of block space, blockspace value destruction, disincentivised simple transaction, centralization around complex transactions composers).

Expected behaviour

Price of blockspace is the same for any data (1 byte = 1 byte, irrespectively of location inside or outside of witness), e.g. 205/205 bytes in the example above. (The "weight" discrimination was unnecessarily introduced in 2017).

Perhaps, the solution (the same price, "weight" of any byte of data in a transaction) could be introduced as part of the next version of Segwit transactions.

Steps to reproduce

1. Create two transactions: a simple (e.g. aabbcce67f2aa71932f789cac5468d39e3d2224d8bebb7ca2c3bf8c41d567cdd ) and a complex one (e.g. 1c35521798dde4d1621e9aa5a3bacac03100fca40b6fb99be546ec50c1bcbd4a )
2. Measure amount of data of each transaction.
3. Calculate blockspace price for both of them and compare to determine that they are not the same.

Relevant log output

How did you obtain Bitcoin Core

Pre-built binaries

What version of Bitcoin Core are you using?

26.0

Operating system and version

Not applicable.

Machine specifications

Not applicable

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• Adam Back, 3-Apr-2016, https://www.reddit.com/r/Bitcoin/comments/4d3pdg/comment/d1nxn28/

The primary idea behind the discounts are to incentivise wallets to manage change differently and clean up the UTXO set. This is best explained by Adam Back here

Yes it takes more bytes to spend a transaction than to split a transaction because input consumption includes signatures (witness data) and outputs typically contain only P2SH which is compact. So the discount balances those input consumption bytes and output creation bytes so there is no longer a financial incentive to create dust. To be sure if you run out of coins your wallet will use change, but until then it will keep splitting coins. Say you have 100 1BTC lumps in your wallet for privacy, and you make 100 < 1BTC payment your wallet will correctly minimise fees by splitting all 1BTC payments and creating 100 change coins. That is bad for UTXO bloat. With the incentive fix depending on what amounts you're paying the UTXO bloat will be much smaller. A negative economic externality is saying someone else, or everyone is paying for your actions because you are not exposed to their cost. That is what is happening today with change.

• @achow101, https://achow101.com/2016/04/Segwit-FUD-Clearup

Is there an economic basis for setting the original discount at 75% instead of some other number?

If it's okay to arbitrarily reduce the discount by 1/3, what are the actual boundary limits: 50% - 75% ? 40% - 80% ?

So, something to keep in mind in general in all these discussions is that at best engineering always has "magic numbers" involved, the question is where?

• @petertodd, https://lists.linuxfoundation.org/pipermail/bitcoin-dev/2016-February/012411.html

https://delvingbitcoin.org/t/bug-spammers-get-bitcoin-blockspace-at-discounted-price-lets-fix-it/327/4?u=gregtonoski

2024-01-11T14:31:31 <@sipa> sigh, there is economic demand for block space, whether you like it or not - the buyers and sellers of that space both want the transaction to occur, i don't see what anyone thinks they can do about that

Of course, there is economic demand for data storage. All the more so if it is permanent, distributed, replicated, immutable and branded by Bitcoin.

At the same time, there is economic demand for money (satoshi) transfers.

The block space is limited and so the choice must be made: either Bitcoin Core is optimized for money or something else (data storage). Otherwise it fails at both.