delvingbitcoin

Deterministic tx selection for censorship resistance

Deterministic tx selection for censorship resistance

Original Postby harding

Posted on: May 4, 2024 21:22 UTC

The discussion raises concerns about the implications of enforcing a centralized transaction selection mechanism among miners, particularly in the context of decentralized mining pools.

The core issue revolves around the potential exacerbation of centralization in transaction selection, contrary to the decentralization ethos of blockchain technology. By hypothetically considering a scenario where 99% of transaction selections are controlled by a single entity, it is highlighted that there remains a slim margin (about one block per day) for independently selected transactions. This margin allows for transactions with higher fees to bypass potential censorship, underscoring the role of transaction fees as a countermeasure against censorship by enabling users to incentivize the inclusion of their transactions.

Furthermore, the proposed system, wherein all miners in a pool are required to prioritize transactions pre-selected by others before choosing their own, is critiqued for potentially magnifying centralization issues. This arrangement inadvertently creates a monopoly-like situation where the first miner to include a transaction in a share gains disproportionate power over transaction selection. Such a system could lead to the exploitation of out-of-band fees and enable the effective censorship of transactions by privileging certain transactions over others. This dynamic could severely limit the diversity of transactions included in blocks, undermining the democratic and decentralized decision-making process inherent in blockchain networks.

In summary, the concern centers on the detrimental effects of mandating a uniform transaction selection strategy across decentralized mining pools. This approach not only risks increasing centralization but also compromises the foundational principles of blockchain regarding transparency, fairness, and open participation. It spotlights the delicate balance between combating censorship through fee mechanisms and preserving the decentralized nature of transaction selection processes within the cryptocurrency ecosystem.