Thank you for the answer. Can’t wait!
Don’t want to take up your valuable time so if there is a resource other than the protocol code itself (even if written in my native language I doubt I would grasp the concepts entirely from the code) you can point me — all the better.
So you are saying each miner can set his own price? Or must they all use/accept the lowest price amongst the miners?
Can we get more granular / technical or can you point to a place/link one can read to understand the competitive dynamic better? For example:
Let’s say there are 5 miners A-E all accepting 1 Satoshi per Byte, but miner Alpha is making 45% profit margins while miner D is struggling at breakeven. Alpha strategizes if he lowers price to 2 satoshis per 3 Bytes he will slightly lower his gross margins but will make more money via volumes doubling as users take advantage of one-third discounted storage prices.
After Alpha’s price is lowered the next transaction of a new block (call it “million”) rolls in and its 300 bytes. Miner Epsilon is the first miner to see the transaction thanks to geo-proximity, he validates the transaction and passes it to the other nodes. Several questions:
1. Would the wallet sending the transaction know miner Alpha has lowered price? If he knew and set his output to request the lower fee, would Epsilon pass the transaction to the other nodes since he doesn’t agree to the lower price? Or do miners not know if they are the first or last to receive a transaction?
2. Given 4/5 nodes still charge the higher 1 Satoshi per byte, how would sender wallet be billed by miner Epsilon?
3. What would be the immediate effect on Bitcoin prices if the doubling of volumes (based on lower price attracting more volume) took 2 years to occur?
4. If all miners lowered prices obviously this would obviously put bankruptcy pressure on miner Epsilon who was already struggling at the previous block fee rewards. So when he turns his mining rigs off (eventually, as perhaps even his sunken cost, or cash flow, profitability goes away) and volume doubles — did security of system increase decrease or remain the same?
Which is more historically interesting/ironic given humanity’s use of solidus (gold coins) the sterling (silver) and other physical proof of work mediums of exchange?
The fact that electronic money happened (take the Fed “printed” digital dollar for instance) before it was backed by a computational asset, or that the BitCoin protocol created a digital asset to back electronic money?