davidsterry.com / By David Sterry / June 10, 2015
Ever since Gavin Andresen’s first post about increasing the block size a month ago, a debate has been raging across all Bitcoin discussion forums on whether or not to increase Bitcoin’s block size limit. Actually the debate has been going on for longer than that but the rate and temperature of discussion have been greatly increased since Gavin began to highlight the issue.
There are as many opinions as there are participants in this debate and the sheer volume of discussion is so high that few have time to follow it all. My feeling is that most people with strong technical knowledge of the system have chosen a way forward and would rather argue for that way than summarize the arguments presented by each side. I put together the following to help myself and others make up our own minds.
Before we get to the arguments, here is some technical background on the block reward, fees, miner considerations and the block size limit itself. If you understand them already, feel free to skip to the For andAgainst sections.
Block Rewards and Fees – Bitcoin miners are currently awarded 25 new bitcoins per block, an amount will halve every 4 years or so until the amount is finally shifted down to zero more than a century from now. Miners are also paid with voluntary fees set by the signatories of each transaction. When a miner finds a block, they collect the fees from each transaction included in their block. A miner is free to choose which, if any, transactions they include in a block as long as the transactions are valid and don’t make the block too big. Miners who wish to increase their income then have an incentive to include transactions with higher fees per kilobyte over ones that provide less.
Add up the block rewards and fees and you have an aggregate budget available to all miners that will go into operating mining nodes, the hashing work that secures the network, and in theory, profit.