Friday 29 April 2016

What are the impacts of Segwits 75% fee discount?

I'm quite concerned about Segwits 75% fee discount because it's complicated to understand the impacts. The impacts I am reading about seem to be quite fundamental changes and therefore very risky from my view. Please help if you can comment or provide further links for reading.

I've looked here:

http://bit.ly/1SCP4kI "It should be noted that although spending more inputs makes the UTXO set smaller in size, it also associates some outputs (addresses) as likely being owned by the same user. So there is a privacy/cost trade off for the user. "

http://bit.ly/1nl8vFB

"This is expected to encourage users to favor the use of transactions that minimize impact on the UTXO set in order to minimize fees, and to encourage developers to design smart contracts and new features in a way that will also minimize the impact on the UTXO set."

http://bit.ly/1OF8Bik

"Each byte of the witness part of a segregated witness (segwit) transaction will only count as 0.25 bytes towards the size of the transaction. Since transaction fees are based on the size of a transaction, this is effectively a 75% discount on fees for that part of a transaction—but only for people who use segwit."

http://bit.ly/1WuDPQ5

gavin: "If you have hardware or software that can't produce segwit transactions you will pay higher fees than somebody with newer hardware or software."

http://bit.ly/1SCP4kJ

jtoomim: "I think the 0.25x byte discounting in SegWit is effectively a subsidy for projects like Lightning and sidechains. Those projects have more complicated signature scripts than typical transactions, so they benefit more from the signature script discount. I don't like that. Lightning and sidechains should compete with on-chain transactions on their merits, not on their subsidies."

http://bit.ly/1WuDNYz

ptodd: "> What is the rationale for offering a discount?

UTXO set space is significantly more expensive for the network as all full nodes must keep the entire UTXO set. Additionally, transaction input/output data in general is argued by some to be less expensive than signatures, as you have more options with regard to skipping validation of signatures (e.g. how Bitcoin Core skips validation of signatures prior to checkpoints)."

Questions:

1) Are there other existing services or txs types that will be impacted?

2) Will zero confirmation txs or RBF txs be impacted?

3) Don't Coinjoin txs have a larger UTXO... so will this impact Coinjoin txs fees?

4) Will old standard non-segwit txs be more expensive than standard segwit txs?

5) If the 75% constant turns out to be the wrong number is it easy to change or could it cause further infighting within the community?

6) Can anybody express the economic impacts of the above if any or other impacts they expect as a result?

EDIT: (Thanks for the replies so far I have added a couple more)
7) Why is any fee discount necessary?

8) Would segwit function well without the discount?

Thanks in advance.



Submitted April 29, 2016 at 04:25PM by redmarlen http://bit.ly/1SCP5oT

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