Good morning marvellous readers,
Over the past few days I've seen the price increase in fees from 200 satoshi per byte up to over 1000 satoshi per byte (https://bitcoinfees.earn.com). I've started contemplating ways we can get around this. The most obvious solution is to fork to a larger block size but that requires network consensus and after the Segwit2x failed, we need everyone on board to implement a change like this smoothly. As a long term solution this doesn't have all the best outcomes therefore in this article I would like to explore the already implemented technology and propose a method of increasing transactions.
Consider the number of segregated witness transaction per block. This has remained relatively stagnant between eight and twelve percent for the last two months (http://segwit.party/charts/#). By looking at the transactions per block compared to the number of segwit transactions, one will notice a jump in total transactions when segwit transactions increase. This indicates it as a short term scaling solution by better using the current resources.
Bitcoin miners are incentivised to mine and maintain the network through block rewards, from the coinbase, and transaction fees collected. The roll out of segregated witness, being a soft fork, did not force any user into utilising the optimised system. Miners who are there for the long term adoption or are happy with the coinbase reward might be happy to implement a system to promote segwit adoption without forking to a mandatory system. Incentivising the use of segwit addresses by including them over legacy addresses would encourage most users and larger companies alike to implement the user end system.
An example of how to avoid abuse of this system would be to take the required network fee to be included in the next block and set a minimum fee to be used for the segwit transaction, for example ten percent. If ten percent or greater is paid then this transaction gets preference of a higher fee to a legacy address. Given a miner has the autonomy to include any transactions they want as long as it is a legal transaction this would still gain network consensus and could be optionally at an individual miner/pool's level.
If even a small double digit percentage of the network's hashrate adopted this it would have huge potential to incentivise usage of the segwit addresses and therefore segwit transactions. Currently there is no promotion for the larger companies like exchanges such as Coinbase, Bittrex and the like to adopt this system as they gain their fees off people trading internally. Having lower fees for those moving on and off the exchanges would give smaller businesses who already have implemented segwit a competitive advantage and would also promote the eventual implementation of lightning network and adoption by the above mentioned companies as different users shift coins between their exchanges.
While this is not a long term solution it is just an idea that could promote a good outcome.
Regards,
TheFundiAU
As always... Comments welcome I will try to respond when I have time. You should make your own decisions or contact professionals. I am not liable for any conclusions or decisions made from viewing this post or links.
Useful links and site reviews: https://thefundiau.wixsite.com/home/useful-links
