You should think of miners as bodyguards. They aren't intended to be active participants on the network, they are intended to provide the service of securing the network and serving the interests of the users of the network.
If a group of bodyguards at a concert vote democratically and 51% of them decide the singer shouldn't be allowed to go on stage and sing (because of a grudge or whatever), is that a problem? Yes absolutely that's a problem, and probably all of them are going to get fired.
Same sort of idea here. If the miners aren't serving the best interests of the network, the network has no obligation to continue paying the miners tens of millions of dollars per day (no joke, that's how much miners on Ethereum make in revenue right now) to continue sticking around.
Miners provide security for the system, but they do so at the behest of the users. If they don't enforce the rules that the users desire, the users will reject their blocks and the miners won't get paid.
They are paid fairly in exchange for providing it. If the current set of miners decide that they don't like Ethereum anymore then those profits are sitting on the table for anyone to take.
I think that the mistake here is believing that the miners control the network, when most likely the miners simply work for the decentralized network. When the miners become centralized there is little they can do that the users/nodes can’t unwind with a software update, even up to the point of firing those miners completely if necessary (changing the proof of work so that their current hardware is worthless). I think that long-term the incentives are aligned for them to simply do their job.
I believe I understood your comment [0] as saying more-less "bitcoin miners work to maintain blockchain security; monetary reward is just thrown in to sweeten the pot", which would not be true because the miners only care about that monetary reward. After re-reading the entire thread I now think you just wanted to say something like "miners get paid to keep the blockchain working, the same way e.g. plumbers get paid to keep the plumbing working", which would be something I of course agree with. Therefore, I apologize for arguing against a point you didn't make in the first place.
kind of. But the miners have a financial incentive to follow the system. The system is built in such a way that it's in their best interest to follow the system (except in a coordinated 51% attack, then the system falls apart).
For example, if an honest blockchain solved a problem of great importance to me (value = x) and even by putting a small amount of work (value < x) into mining the blockchain I could protect myself (say withdraw from action during double action attacks) then you can create a system where many people are mining, making the entire blockchain more secure each while guarding their own interests.
Wouldn't a rational actor free ride instead of mining? Also, the total hash rate needs to be high enough to prevent 51% attacks, so there's no guarantee that your cost of mining would be smaller than your benefit. A blockchain that doesn't pay miners seems to have an equilibrium where trolls 51% it into oblivion (as has already happened with some scamcoins AFAIK).
This whole thing is actually really straightforward if you evaluate it from the perspective of governance. In bitcoin, miners run software and the software they run controls the performance of the network. Miners therefore control the future software state of the network.
Anything that moves transactions off of the network or decreases the number of miners queried per transaction is therefore antithetical.
If you are a miner, lightning and segwit just hurt you. The only way you'll allow them is if you believe that to do otherwise would slay the golden goose.
Not sure if I misunderstand you or disagree. Why should the miners bear the transaction costs? They provide a service, running the network and processing the transactions, to the users wanting to transfer money so they have to pay for this service.
People would only follow mining power that represents their interests. They don't care about individual miners. If a majority of miners were not representing the interests of the users, the users would find a way to push those miners out and will carry on as before.
Miners can only generate revenue by mining a coin that people want to use. They want to use it because it is secured by a distribution of miners, such that no collaboration of miners can attack it. If the premise is that a group of miners can attack it, because that group of miners want to push their rules, then the concept is broken.
Total hash power is not the deciding factor. What matters is that honest participants have more hash power than dishonest ones. The honest ones can adapt far more easily than large miners, who have too much invested to handle something like a proof-of-work adjustment.
The big issue there is that just keeping the network alive becomes enormously expensive right? So if miners aren’t being incentivised by processing transactions (because they’re way too expensive mostly) then there will be fewer miners?
The miners are not siphoning value, if that were true the network would not require them and there would be one thousand forked repos running off your imaginary system which secures account balances without the economic deterrent.
Miners provide security and thus value to the system, if the users don't follow them, their coins lose security and thus value. The chain with the most hashpower has the value and the users have no choice but to go with it or they risk their coins losing value. The users are not in control.
yes miners have an incentive to protect the network. Essentially they are providing a service.
That's the whole point, Bitcoin is a closed system and because people are inherently greedy that greed is used to benefit the greater good.
If bitcoin was over provisioned then miners would capitulate. Which actually does happen from time to time.
Also you make an assumption that miners are only providing service per transaction. This assumption is wrong. Due to how merkle tree's work bitcoin makes it expensive to add blocks to the tree but cheap to verify the whole tree. Each new block protects and verifies all previous blocks and transactions.
A majority of bitcoin miners can also prevent transactions from entering the ledger at cost to themselves, just like Ethereum stakers. It's a misconception that Ethereum works via stakers voting the way people normally think of voting.
If a group of bodyguards at a concert vote democratically and 51% of them decide the singer shouldn't be allowed to go on stage and sing (because of a grudge or whatever), is that a problem? Yes absolutely that's a problem, and probably all of them are going to get fired.
Same sort of idea here. If the miners aren't serving the best interests of the network, the network has no obligation to continue paying the miners tens of millions of dollars per day (no joke, that's how much miners on Ethereum make in revenue right now) to continue sticking around.
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