Mark “Murch” Erhardt and Mike Schmidt are joined by Peter Todd, Larry Ruane, and Gloria Zhao to discuss Newsletter #212.

The Bitcoin Optech Podcast and transcription content is licensed Creative Commons CC BY-SA 2.0


  • Lowering the default minimum transaction relay feerate (2:30)

Bitcoin Core PR Review Club

  • Decouple validation cache initialization from ArgsManager (31:25)

Notable code and documentation changes


Mike Schmidt: We are going to review the Bitcoin Optech Newsletter #212 and we have one main news item for this week and our special segment. I’m not sure if people follow along, but we do have once-a-month segments; one of those this week is the PR Review Club, and Larry actually did the writeup this month, and we’ll be taking over that moving forward; and we also have special segments for Client and service updates, which is notable technical updates to software using scaling or new Bitcoin technology, and we note those with links; and then there’s also the monthly Stack Exchange section that is another segment that we do monthly, where we go over popular Q&A from the Bitcoin Stack Exchange. So, this week is the review club.

Lowering the default minimum transaction relay feerate

So, I think we can just jump in with our news item here, which is the topic of lowering the default minimum transaction relay feerate. And we brought on Peter Todd, who has been contributing to that discussion on the mailing list in this most current iteration of the discussion. Perhaps it also makes sense, since we may have some new listeners, that everybody sort of provides a quick introduction. So, I am Mike Schmidt, I contribute to Bitcoin Optech, and I also am the Executive Director at Brink, where we fund Bitcoin open-source developers. Murch?

Mark Erhardt: Hi, I’m Murch, I help educate people about Bitcoin online and I work at Chaincode Labs. I write for the Optech Newsletter sometimes.

Mike Schmidt: Peter, do you want to introduce yourself?

Peter Todd: Yeah, I’m Peter Todd, I’ve been involved in Bitcoin in various ways for years now and used to do a fair amount of Core development as well, though I haven’t actually contributed to the codebase for a while. And also, worked as a consultant in various stuff related to consensus.

Mike Schmidt: Excellent. Larry, do you want to introduce yourself?

Larry Ruane: Hi, I’m Larry Ruane, and I work on Bitcoin Core, mostly doing reviews on a grant from Brink.

Mike Schmidt: Excellent.

Mark Erhardt: How about we start with a short overview for the minimum feerate, like what is it and what does it mean in the first place, before we talk about changing it?

Mike Schmidt: Yeah, I think that is a good place to start and I think that there was some mixing of terminology, which I think might be good to clarify as well. So, maybe I can take the 101 summary and then we can jump into a little bit more depth there. So, yeah, the discussion here is about transaction relay feerate. So, if I am crafting a transaction and I want to broadcast that, I need to make sure that I have peers that will relay that transaction. And one of the factors in consideration of whether or not a peer will accept and relay a transaction is the minimum feerate, and that’s the minimum relay feerate, which is currently 1 satoshi per vbyte (sat/vB). So, if for whatever reason I have a transaction whose feerate is, let’s say, half of a satoshi, then what will happen on the network currently is most folks have the default, which is 1 sat/vB, and they will not relay that transaction. So, if I was doing that to attempt to get a low fee transaction confirmed, the likelihood of that being propagated in the current topology of the network would be low.

We’ve actually had, I think, I don’t know if it was an exchange or wallet software, that was incorrectly calculating the feerate and ended up in certain situations having something just under 1 sat/vB in the past, and those transactions weren’t being relayed or confirmed. And so, due to some miscalculation on some of the software side, those transactions weren’t going through as estimated. And I want to distinguish the relay feerate with the dust limit, and I don’t recall the exact numbers for the different output types on dust limit, but you could in theory have a 10-bitcoin-denominated transaction that doesn’t get relayed due to the feerate. And so, that can happen with large amounts as well as small amounts, whereas the dust limit is more about the actual size, the amount of bitcoin in the transaction, as opposed to the feerate being paid by the transaction. So, Murch?

Peter Todd: I mean, maybe just to explain it quickly, the idea of the dust limit is to forbid the creation of outputs that would be unprofitable to go spend in the future, because they’re just so small that the fees necessary to spend them is unlikely to be worth it.

Mike Schmidt: Yes, exactly.

Mark Erhardt: Yeah, the discard feerate is 3 sat/vB, so if a UTXO is so small that spending it would cost more than, yeah, I believe – how do I explain this best? If it costs 3 sat/vB to spend an input, and that’s the size or value of the UTXO, the transaction will not be added to the mempool by standard Bitcoin Core nodes. Yeah, one comment, maybe it’s still on your overview. The min relay transaction feerate is 1 sat/vB. So, most nodes will actually not accept transactions to their mempool, and also they learn about it and immediately drop it because it doesn’t meet the minimum criteria to be added to the mempool. And obviously, if they’re not added to their mempool, they will not forward it to their peers either.

Actually, there is a small amount of nodes that have lower min relay transaction feerates set, because it is a setting that you can change on startup of your node. It is just that it seems apparent that no miners are mining anything below min relay transaction feerate. I’ve looked at the block data a few times in the past and I could not find any transactions that were included that were below that feerate. So, I think it’s mostly stopped at the miner level where nobody is taking the transaction and putting it into blocks.

Peter Todd: I mean, I believe you’re somewhat incorrect there, because it looks like some miners at least mine zero fee transactions. Those seem to be things that they generate internally to then do whatever they need to do for their business. So, it may be true that no one mines any non-zero fee transactions with very low rates, because there’s no way to get in there. But it’s a little hard to be sure about that, because of course no one’s creating them either.

Mark Erhardt: Okay, I’m noting specifically a discrepancy on the mempool charts, mempool monitors, that shows that there is, at times, 30 to 60 MB worth of transactions waiting with feerates below the min relay transaction feerate. And then there is, of course, the coinbase transactions that have zero fee usually, or not usually, I think there’s no way for them to have a different feerate since they don’t have an input. And sometimes miners do include their own transactions, I would agree on that, but it’s like if you look at it, I think the last figures I got were maybe one or two per day, which out of 350,000 transactions per day is basically zero.

Peter Todd: Yeah, I mean, it’s certainly a trivial amount, although I would point out that because no one’s really able to relay below min feerate transactions, it’s quite possible some miners do in fact have their actual nodes set up that way, and there’s just no realistic way to get transactions to there, and that’s something that’s quite unobservable to us, because the moment you diverge from commonly accepted relay policy, it just gets very difficult to get the transactions to the miners.

Mark Erhardt: I have a slight disagree there, just because I do see on multiple mempool monitors and also from individuals that run with lower feerates, that they do end up getting transactions. So, if miners were using those feerates and also had their border nodes configured to relay transactions at these low fees, I do think that we would see at least some blocks where currently with many blocks having extraneous space that is not being used, that include setup of transactions. But I don’t see any blocks where there’s a significant number of these transactions at all.

Peter Todd: But I want to say, the thing with mempool monitors is, just because these show up in a few different nodes doesn’t mean that they have any way of propagating. Because some of these mempool monitors, the way they work is they connect to a very large number of nodes at once, but that doesn’t mean that those transactions will still be able to propagate from one to another. I mean, I haven’t actually done the exact math on this, but roughly speaking it’s probably true that if, say, 1% of the Bitcoin nodes happen to go and use some non-standard policy, transactions will propagate reliably between those different nodes because there’s just not enough interconnections. The mathematical theory behind this is percolation theory, and it’s a bit complex, like what thresholds are needed to propagate. But essentially, the way percolation theory works is that below a certain threshold of interconnectivity, the ability of transactions to broadcast, well of anything to percolate through a network, goes to zero. It’s a very strict threshold. You’re either above the threshold where things would propagate or you’re below it.

Mark Erhardt: I have more comments on that, but let’s take it elsewhere. I think that we’ve covered how it’s difficult for the transaction to propagate in the first place, and there may or may not also be probably no miner that actually includes some at this point. But what would be the advantages and disadvantages of reducing the feerate and how would that be achieved in the first place? That’s maybe another interesting topic that we should cut into.

Peter Todd: Well, first let me just mention one thing that I think wasn’t mentioned, which is the minimum relay feerate, there’s actually two versions of it, right? One is the absolute minimum that any node will allow, which is sort of a setting that you send to your bitcoin.conf file. But then there’s a second variant of this, which is as the mempool fills up to the, by default, 300 MB limit, then the minimum relay feerate is chosen by what’s actually at the minimum feerate in the mempool. So, as more transactions come in, other transactions get evicted from the mempool and replaced, and then that minimum feerate can actually go up.

Mark Erhardt: Yes, that’s a good point.

Mike Schmidt: Peter, as you’re talking about sort of the feasibility of propagating, I know there’s BIP133, which provides some sort of peer messaging about essentially informing and getting information from your peers to either send or not send in messages related to certain fee levels. I don’t know if anyone’s done any research on the network to see what those values are set at, to be able to determine the feasibility of propagating these lower feerate transactions; I don’t know if, Murch or Peter, you guys are aware of anything around that?

Mark Erhardt: I think defaults are super-sticky and they’re just going to, like 99%, maybe 99.9% of all nodes will never change their defaults. And so, a network will form a connected component of a subgraph if there’s at least two edges in average that exhibit the same property. So, I think, yeah, one or 2% of all nodes setting that would probably be enough for transactions to somewhat reliably broadcast, and much fewer if they had a way to preferentially peer. I kind of find that interesting, but I’d like to also get into other topics a little more. We’ve covered this already for ten minutes.

Peter Todd: I mean, I could maybe answer the advantages and disadvantages question, which is, the thing with minimum fee relay is that the current situation the network works in, where mempools are rarely full, the minimum fee relay is basically nearly 99.9% of the time, the actual minimum, etc. This doesn’t match how people expect the network to work in the future, where transaction fees are much higher, and mempools are constantly full, and there’s constantly backlog, and so on. So, what we’ve done by putting in this minimum, which is well above the market threshold, which would be the minimum, is we constantly have the network in a situation which we’re not expecting it to be in the future. And I think this is not a good idea to have.

I think we’d be better off figuring out how the network works, what we expect it to work like in the future, by setting a threshold low enough that the market forces can go figure out what the feerate should b based on purely demand and the mempool limit.

Mark Erhardt: Yeah, I think that is an interesting proposal. And yes, we already have a hard limit on how much data will go through the network in the long run because obviously, once the block space is all spoken for, there would be a natural limit forming by the mempools filling up, the dynamic feerates potentially going up, and then people wouldn’t broadcast and relay these transactions anymore. So, I think that is a good point and an important idea to keep in mind, and we should probably do it, I would agree with Peter. But I think the original reason to introduce the min relay transaction feerate was that we don’t want the network to be used as a cheap broadcast system. If you have the option to relay data to every single node in the network that then later never gets mined, you essentially give people the ability to cheaply broadcast to the whole network for free, because they do not pay the transaction fee later.

So, maybe there should be a very small minimum just to make it not free. And I think that the replacement feerate should remain the same, where if you want to use the same funds again and again to create transactions that you have to increment in solid chunks. But other than that, yeah, maybe it would be very interesting to drop the current min relay transaction feerate to something much lower. Peter?

Peter Todd: I mean, it’s important to remember that as long as we have transaction expiration, it will always be possible to use the mempool in the future to go broadcast stuff for nearly free, because it’s unlikely to get mined. But this isn’t something that the minimum fee relay actually gets rid of in the future, because the minimum fee relay is expected to go and float, which provides you the ability to go broadcast data by just broadcasting transactions that are close to that. And most of the time, they’ll eventually get knocked out of the network. So, I think again, this speaks back to, we have this artificial limit here which blinds us from how the network is actually expected to work in the future, and we’re probably better off just tackling these problems now.

As I recall historically, the min fee relays, it was actually added before the mempool eviction scheme was set up. So, this was added first, then we added the ability to go and evict transactions and thus keep a size limit on the mempool. And probably what should have happened is we just got rid of the hard-coded minimum at that point, but historically that’s not how that happened.

Mike Schmidt: Gloria has joined us. Gloria, I know you’re jumping in the middle, but we’re discussing the default minimum feerate for relay, and I’m sure you have some thoughts on that and the mempool.

Gloria Zhao: Yeah, maybe. I think, was Peter still finishing his thought? Also can you hear me?

Peter Todd: The floor’s all yours.

Mark Erhardt: Maybe in two sentences, what we’ve talked about. So, we established what the minimum feerate and the discount feerate and the dynamic feerate are, and we’ve pointed out how the network might operate differently in the future if there’s a constant backlog and we’re not really testing for that yet. Peter made some great points about that. And we talked a little bit about the concern of having a cheap broadcast system, if we allow free relay, but stuff never gets mined. And I think that’s roughly it.

Gloria Zhao: Yeah, I guess free relay is maybe unambiguously not good. But yeah, sorry, I guess I wasn’t here, so I can’t really speak to the old points that were discussed before I got here. But I think historically, we kind of use it as a bit of a DoS protection, and I guess there’s a question of how effective that is, and whether it’s appropriate to use it for that purpose, etc. So, that would be something to throw in there.

Mark Erhardt: Maybe another follow-up, I thought it was interesting, somebody proposed whether we could do a hashrate, or a little bit of a proof of work on transactions. I had some thoughts on that and I also wanted to hear other people’s thoughts.

Gloria Zhao: I mean right now, you can sign a transaction without hardware that’s able to work. So, that might be a bit not fun for some people trying to transact.

Mark Erhardt: Yeah, that was my concern as well. I would see that hardware with signing devices might have issues producing that proof of work, it might obsolete some of the signing devices right now, or, well I guess if they could either pay or do proof of work, it would still work by them just paying a higher feerate. But on the other hand, people that do try to waste bandwidth of other users would probably not be restrained by having low computing power. So, with the small throughput that is possible in the network in the first place, I think it would be pretty easy to harness enough computing power to still produce the necessary proof of work to spam the network with this.

Gloria Zhao: Exactly, I’m not sure how effective that would be.

Peter Todd: To be clear, I proposed the idea of having a separate transaction relay scheme, as an example, using different mechanisms to determine whether or not a transaction was worth relaying. As a separate scheme, I think having proof of work could be an interesting option. But it’s important to note, the way I think a system like that should work is, you would want to have a scheme where anybody, unrelated to the original signer, could just do some minor proof-of-work scheme, and of course by proof of work, I don’t necessarily mean the Bitcoin proof of work, you could choose one of these so-called CPU hard schemes, etc, where the only purpose of that is just to tell these other set of nodes, “Hey, broadcast this transaction, maybe some miners will see it, maybe some won’t”. But I’m not suggesting that we add this to the existing system.

I think the reason why you’d want to have a separate system is for redundancy, because of L2 protocols, where the ability to get a transaction broadcast and visible to miners is really important, because their punishment systems are based on this. If you cannot get a transaction broadcast into miners who can then look at the merits of that transaction on their own, you could lose a lot of money because your punishment transaction will go and your counterparty will steal your funds in, say, a Lightning channel. So for that, having diversity is good, but certainly not something we should add to every transaction.

Gloria Zhao: Okay, so you mean you want more ways to propagate the transaction, not fewer ways?

Peter Todd: Exactly, yeah. I mean, transactions broadcast over Twitter would be perfectly good in this kind of scenario, where obviously, that’s a highly centralized way of broadcasting transactions. But as an adjunct to other systems, that will reduce certain types of failure modes, where for instance, someone’s exploited a mempool bug, and suddenly a bunch of Lightning channels are about to go in to get exploited.

Mark Erhardt: That’s an interesting point, and thanks that you clarified that. I guess I hadn’t thought it through all that much, and I think we also want to get a little bit into the Peer Review Club. So, does anybody have some final points that they want to add about the minimum feerate topic?

Mike Schmidt: I’ll relay something that Tadge had sent me offline. Unfortunately, he doesn’t have a microphone on his device, so he’s attending in listen-only mode. But one of the points that he made is that since low feerate transactions could just be sent to the miners directly, you may end up in a scenario where you’re incentivizing modified Bitcoin Core clients that can do such things, and that it might be easier for someone to download a new binary than in modified bitcoin.conf and maybe if it’s not the default client, then you sort of end up with these alternate clients with these patch systems that can do these sorts of things. So, I don’t know if you guys have thoughts on that incentive, or that consideration?

Gloria Zhao: I don’t think there’s that much wrong with there being some nodes that are changing their configurations. I mean, min relay fee is configurable, so that’s totally fine. I think the question of changing the default is like, okay, maybe 1 sat/vB is suboptimal, but if we’re going to decide on some new value, it shouldn’t be arbitrary. So, the process of figuring out what this new value is, is if someone were to simulate, “Okay, what’s the cost of using this much network bandwidth that we determine is not okay and considered spam/attack? What does that look like in terms of sats; and then, what does that look like in terms of USD, or whatever; and then that’s the budget. That’s probably the process of coming to a conclusion on what this new value might be, otherwise we’re just going to go and bikeshed, “Why is it 0.1; why is it not 0.2; why not whatever?” But yeah, if anyone says, “Set it to zero”, I would say that’s quite unsafe. But yeah, that’s my two cents on how we would come to a new value for defaults, not for configurable things. Sorry, go ahead.

Mark Erhardt: Yeah, I wanted to mention two things. One is, having multiple avenues how clients can be distributed might be a great thing, but if it becomes very broad so that a ton of people publish clients, it might also be easier to distribute malware, because people would become maybe more accepting of, “Oh, yeah, they are doing something cool now and I’m getting it from this random sketchy website”. That might be a concern that might hit some random users more than advanced users, but there is a certain safety in having a solitary source of where you can get the client. And if we were able to configure our client directly to exhibit these behaviors, that would be safer for users that are less discerning, maybe.

The second point that I wanted to make is, if we actually drop the feerate to zero, it would perhaps become very cheap for people to consolidate outstanding UTXOs that are tiny right now, but it might also become really cheap for people to create a ton of UTXOs, and I think it might be really hard to specifically think what effect such a change would have. And yeah, so the bikeshedding would be pretty difficult maybe to conclude.

Mike Schmidt: Go ahead.

Peter Todd: As long as the dust limit is still in existence, it would not become cheap to go create a new UTXOs though, because you’ve got the dust issue. And then I think I’d point out, I mean what I expect would happen if you actually just said it’s zero, was people would do consolidation transactions, whatever, maybe spam the mempool, who cares what it is; and in practice, the limit would actually be set by the mempool size limit. So, whatever the heck, you know, 300 MB works out to be by the market, that’s what would happen, and it would probably be somewhat consistent across different nodes. And again, I think the advantage of that is we just go and operate in a regime where we keep saying we expect to operate in the future. Because in reality, blocks are pretty close to full, but not quite. Yet somehow, despite being pretty close to full, we’re not seeing big backlogs like people expected. And I think we should explore what’s really going on there and why is it that these backlogs of transactions aren’t popping up like we expected.

Mark Erhardt: Great. Back to you, Mike.

Mike Schmidt: Yeah, a couple of things. One, Tadge mentioned similarly that he would like to see what that backlog would look like with a reduction in the min relay. His guess was that there would be a large backlog of sub-1-sat/vB transactions; that’s just his stipulation. And then my question to the group is, to Murch’s point about allowing these consolidations at lower feerates, I don’t know if any miners in the past have volunteered to process batches of those lower fee transactions that would facilitate consolidation on behalf of the network. It may not be financially prudent for them to do so, but I don’t know if anybody in the past has done that as an altruistic thing.

Gloria Zhao: I think it has happened.

Peter Todd: Yeah, F2Pool, but yeah, you go ahead, you probably know too.

Gloria Zhao: No, you go ahead.

Peter Todd: All right, yeah. Anyway, F2Pool mines huge numbers of 1 satoshi outputs, and I think even some 0 satoshi outputs that were I believe actually non-standard that got mined. So, that has happened in the past, but I believe that was all just done manually.

Mark Erhardt: I think we’re going to wrap up, or what do you think, Mike?

Mike Schmidt: Yeah, I mean that sounds good to me, unless Peter or Gloria have something else on this topic.

Peter Todd: Sounds good to me.

Decouple validation cache initialization from ArgsManager

Mike Schmidt: All right, great. Well, like I mentioned, we have a monthly segment this week, which is the Bitcoin Core PR Review Club. Gloria is here on behalf of both, I guess, PR Review Club, as well as the host of this particular meeting that we’re covering this month in the newsletter. Gloria, I think it might make sense if you sort of pitch the PR Review Club before getting into an overview of this particular PR.

Gloria Zhao: Yeah, sure. So, Bitcoin Core PR Review Club is a weekly meeting where we pick a PR, the host will put up some notes and some questions about that Bitcoin Core PR, and then we take an hour on IRC every Wednesday at 17:00 UTC to discuss those questions. And pitch-wise, this is basically how I learned the Bitcoin Core codebase. It’s very large, and there’s a lot of components, it’s very large in scope. And each PR, you can kind of think of as like a guided tour through some functionality. Sometimes it’s a bug fix, sometimes it’s adding a feature. Either way, the notes sometimes give kind of a scenic route of the associated parts of the codebase, so it’s a great way to learn about the code. And the questions are kind of designed to help you build up a review mindset of what kinds of questions you might want to ask yourself to convince yourself that a PR is safe.

So for example, the one that was covered in Optech this week was a refactoring PR. And there’s no behavior change, and so the questions went through each commit and listed questions of like, “How can you verify that? How can you use GDB to make sure that something is still hit, even though it was deleted?” Or like, “Why is this C++ attribute added to this function; why is that appropriate? Why is this type change?” just like, how do you dive a little deeper and zoom in on the details and be just a really security-minded reviewer. So, that’s kind of my pitch and recommendation for coming to PR Review Club. It’s at

Mike Schmidt: Yeah, I think I would endorse any folks who are curious about the technicals to jump into one of those meetings. You could spend a bit of time before the actual meeting itself and study the PR, but you could also just sort of jump in and follow along with the discussion, either while it’s happening or after the fact there’s logs on the website to review everything. And I think it’s a good way to sort of dip your toe in the water if you’re curious about the technicals and want to sort of get a shotgun approach of each of the areas of the codebase. You may be doing P2P one week and consensus change the next week, or a factoring one like this one. So, I would endorse folks who are curious to join.

Gloria Zhao: Yeah. And I should have mentioned that it’s open to anyone and you’re supposed to be able to ask questions and all beginners are welcome.

Mike Schmidt: Gloria, you kind of gave a slight summary of the PR. Do you want to jump in a bit further? Do you want to go through the questions? How do you want to approach?

Gloria Zhao: I would recommend if people are really curious, just go and read the logs or look at the PR itself. So, the PR is called Decouple validation cash initialization from ArgsManager, so a few pretty Bitcoin Core specific terms in there. It is part of the libbitcoinkernel project, which maybe we can talk a little bit about.

Mike Schmidt: Yeah, I think talking about the project would be interesting, since it may not be something that folks are familiar with. And if they are, maybe understanding what is the motivation for that; where could it be used in the future; etc? And Gloria, I know you have some opinions here.

Gloria Zhao: Yeah, well, so this is Carl Dong’s project, and I think the background is essentially Bitcoin Core is called the reference implementation of the Bitcoin protocol. And it’s always hard to completely modularize code, and so maybe part of the reason we see a kind of dominance of Bitcoin Core as the implementation used by nodes on the network is, it’s quite difficult to create a brand-new implementation because it’s so, so important to stay in consensus, and it’s kind of hard to replicate because it’s very hard to enumerate what all the consensus rules are and what all the consensus-critical components of the codebase are. And so, libbitcoinkernel is one of, I think there have been many attempts, or several attempts at least before this to essentially modularize what is consensus, what is consensus critical.

I don’t want to butcher this explanation, but so it’s not just meant to be like, “Oh, let’s throw all of the consensus functions into a library”; it is, it’s supposed to be a kernel, so a stateful, like, how do I say this? I’m butchering this, but it’s own – well, let me just quote from this. So, let’s see, “It is a stateful library that can spawn threads, do caching, do I/O, and many other things which one may not normally expect from a library”. And I think this approach is separate from, or different from previous approaches, in that it’s, “Reusing existing code”, again I’m basically just quoting from the issue itself, “rather than trying to create one library and throw everything in there”. And so, yeah, hopefully Carl’s not listening to this, but yeah, that’s what kernel is. Go ahead, Murch.

Mark Erhardt: I think you didn’t butcher it, that was a good description. So, I think you mentioned that there’s other things besides just evaluating the rules directly in there, for example, how to behave with the cache. And at that point, I think it would be interesting to point out that in the past, we’ve had, for example, a network fork when a limit was hit on a database that was not on the radar of being consensus critical. So, it is not only a question of enumerating all the rules, it’s also a question of being bug-for-bug compatible with the actual behavior on different architectures, different systems, and different operating systems. So, yeah, it’s much more comprehensive and difficult to actually produce a module that encompasses all of that and can just be imported into different projects. And that’s why it’s not just a library.

Gloria Zhao: Yeah, so to be more specific, you’re referring to BIP50, yeah, which was an accidental hard fork in 2013, where no fork was intended, but a change in the database meant that some nodes were – I think it was, didn’t have enough mutexes to validate all the transactions, and the block had quite a few transactions, and so some rejected it. And so yeah, there’s so many things that are consensus critical, but we wouldn’t maybe consider a consensus rule. Obviously, the implementation details and the database and how many mutexes to have is not part of block validation rules, but it’s an example of – we talk about this a lot in the meeting actually, if people are interested in reading the Review Club notes, the difference between consensus and consensus critical, and thus why it is important to then try to just cut this as kernel instead of extract out what we think are the consensus rules, because that might be impossible to do.

Mike Schmidt: And I think one example from the PR Review Club, that I hadn’t really thought about until it came up, was the cache component, right? That’s another one of those that you could say, “Oh, well, that’s not part of kernel, or whatnot”, and maybe this is a good segue into the PR a bit, which is, “Why is the cache, why should that be part of kernel; and, what could go wrong that would be consensus-related with the cache?”

Gloria Zhao: Yeah, exactly. I guess to dive into these validation caches, so scripts, specifically signature verification, are computationally expensive, and the most computationally expensive part of validating transactions in a block, and thus the block itself. And so, one thing that we do to speed up performance is to cache the signature and script verification results of transactions we see that are broadcast before they’re in a block. So, when we’re validating them for our mempool, we’ll check that the signatures are correct, and whatnot. And so we’ll cache those. And then in block validation, we’ll just use those results and that makes things much faster, and so it’s consensus critical. So, if there is something wrong in the script cache implementation, like for example we’re dropping the last bit, or we’re not actually caching the signature itself but only the pubkey, or something maybe more nuanced than that, but for some reason we’re allowing invalid signatures in our cache, that could be a consensus bug. Well, it is a consensus bug because now you’re no longer enforcing those rules when you go to validate transactions in a block. And so, yeah, that’s why validation caches are part of kernel.

Mike Schmidt: Do you know if the project has aspirations beyond just being used in Bitcoin Core? Like, would this be a kernel used in alternate node softwares?

Gloria Zhao: As far as I know, that is the intention, that after kernel, you could use this to build an alternative implementation of Bitcoin and then maybe we wouldn’t have so many Bitcoin Core nodes, we’d have “kernel plus blank” nodes, which could be healthy for decentralization on the network.

Mike Schmidt: Yeah, I was going to sort of lead you to that, if you want to comment briefly on your philosophy there.

Gloria Zhao: Oh, yeah. So, I think it’s quite important to not have every node on the network be Bitcoin Core. But what that means is, if there is a bug that can cause nodes to crash, for example, like there’s an assertion based on an assumption that is not true in specific cases, then it becomes somewhat easy for an attacker to take down a large portion of the network. Or, if you notice some particular behavior that can cause Bitcoin Core nodes to disconnect each other, then you can cause a network partition. But if we have a bit more diversity in nodes, just from a security standpoint, that makes sense.

The other thing is a lot of people make arguments that Bitcoin Core kind of controls Bitcoin. I don’t think that’s the case, but it’s still a lot of pressure to put on Bitcoin Core contributors and maintainers to be like, “Yeah, you have to make sure this is correct, otherwise if you deploy it and everyone runs it, the consequences can be taking down a lot of the network”. So, hopefully that makes sense as an argument for why multiple implementations make sense. But more importantly than that is, all the nodes on the network should enforce the same rules. And so, if there isn’t like a shared, I don’t know, library or kernel or something, there is that risk of potentially falling out of consensus. And so I think this is a really, really good approach to having both, where everyone is using, let’s say, kernel, which is a minimal set of the consensus critical stuff, and then all the other things that should be optional are.

Then, we no longer have this kind of double standard of like, “Oh, Bitcoin Core needs to be a perfect reference implementation, and we need to make sure that nothing ever breaks”, but also all of these nice things that make Bitcoin usable, like a wallet, like even some of the optional protocol things, like package relay or mempool or whatever, maybe we can have more lightweight versions or more enterprise-focused nodes, like multiple implementations, I’m saying. So, we have both diversity on the network, but also everyone staying in consensus.

Mike Schmidt: Thanks for explaining your philosophy there. For any journalists on this space, you can now quote Bitcoin Core maintainer as saying, “I want you to use Bitcoin Core less. I want less Bitcoin Core in the network”! I kid. Is there anything else about this particular PR or the project in general that you think would be beneficial to the listeners to discuss?

Gloria Zhao: I mean, if people are interested in contributing to Bitcoin Core, please review PRs!

Mike Schmidt: Yeah, that’s a great place to start. Murch, anything that you’d like to add?

Gloria Zhao: No, I think Gloria did a great job of summing it all up. How about we move into the update section with the PRs that got merged? I think we might go a little over the hour, but let’s try to attack that.

Bitcoin Core #25610

Mike Schmidt: Yeah, that sounds great. Murch, why don’t you jump in on this first one, since I know you had some feedback on that when we were crafting the newsletter.

Mark Erhardt: I don’t have it in front of me. That’s 24584, the segregation of inputs? No, that’s the next one. This first one is the RBF default, essentially.

Mark Erhardt: Oh, yeah, right. So, we had a PR that changed the default behavior of Bitcoin Core. So far, Bitcoin Core, the wallet will generate transactions that opt-in to RBF if you create transactions through the GUI. So, currently we’re seeing about 27% of all transactions signaling replaceability. There’s also recently been a change in Bitcoin Core where you get a new startup flag and if you use that startup flag, you will actually not require the replaceability flag on transactions to allow transactions to be replaced in your mempool. So, there’s a little bit of a shift here, or another shift. It’s basically the same things people have been arguing for the last five years, that to get rid of some of the issues around pinning attacks and making replacements easy on the network and making it easy for users to prioritize their transactions and be compatible with mining incentives at the same time, transactions before they’re confirmed should be easily replaceable at a cost, because whenever you replace a transaction, obviously you’re broadcasting data to all of the network, and we want people to opt-in to pay something for that, for broadcasting a message to the whole network.

So, in this specific PR that we’re looking at, we changed that after the GUI already opts-in by default, the RPCs, when you use Bitcoin Core from the command line, will also create transactions that opt-in to RBF by default, and that happens in twofold ways. On the one hand, there is the default behavior on startup, the wallet RBF flag is now true by default instead of false; and there were two RPCs that now by default create transactions that are replaceable by default. I don’t have them in my head right now, which ones they were.

Mike Schmidt: And one thing that I saw, I forget in which venue this was discussed, but something like almost 30% of transactions are signaling RBF, is that right?

Mark Erhardt: Yeah, I think the latest figure is like 27% or so. Funnily enough, a lot of transactions do signal replaceability, but the amount of replacing events is not that high yet. I think that 0xB10C had been collecting some data on that. I don’t know if he’s already published it.

Gloria Zhao: Yeah, based on the graphs that he sent me, it looks like 3% of all transactions are replacements, which is quite a bit. There’s a few thousand every day.

Mark Erhardt: That would definitely go up a bit if two things happen, (a) if we drop the min relay transaction feerate to zero; and (b) if we make replaceability the default, which is what this previous PR, that we link in the newsletter, is about, is full RBF instead of opt-in RBF.

Bitcoin Core #24584

Mike Schmidt: I think we can move on to Bitcoin Core #24584, which is talking about coin selection and –

Mark Erhardt: Oh, can I take that one?!

Mike Schmidt: We have a coin selection guru here that maybe can bring some clarity to what’s going on in this PR.

Mark Erhardt: All right, so when you build a transaction, you have to pick some inputs to fund the transaction, and previously in Bitcoin Core, we have always been just picking from the whole set. With this PR that Josie contributed, we will now try to separate the UTXO types in our wallet first and try to build an input set from each of those separate types. So, if you have P2PKH legacy inputs or native segwit inputs and wrapped segwit inputs, you would try to do coin selection on each of those sets separately. And if you find an input set that only uses one type, we would prefer using only a single type at first.

The idea here is that that helps with some of the fingerprints around building transactions that might reveal especially what the change output was on a previous transaction. And it turns out that if you segregate the input types, you actually can also save fees, because it will now prefer spending larger UTXO types like legacy at low feerates more, and spend cheaper UTXO types at high feerates more, because now we directly create separate sets of inputs for those and our waste metric that we have already will cause it to prefer the one that is cheaper.

Mike Schmidt: Excellent. So, I assume you’re supportive of this change?

Mark Erhardt: Yeah, I think the idea was born for it in a meeting that Josie, I, and a few other people had, and he then volunteered to implement it. I’ve been supportive. I was pleasantly surprised that it also caused fees to go down in our simulations that we did to make sure that it actually is a beneficial change in all avenues, and I think that it is a good privacy improvement.

Mike Schmidt: Great. Anything more to add on that PR?

Mark Erhardt: Oh, maybe there was a different change in, I think it was February or January, and that is that we always, in Bitcoin Core, now match the output type of the recipient with our change. So, when you send money to a legacy output, you would also create a legacy change output, or the same with native segwit, or you would downgrade your output to match the type, because there’s several heuristics that Chainalysis, or chain analytics companies, use to follow the transaction path and try to cluster activity to distinguish wallets. And a lot of them are around identifying what the change output was in a transaction, because that ties future transactions of the wallet to old transactions. And so, matching the type will actually cause us to have UTXOs of different types, which is why this PR is especially useful; and vice versa, having this PR makes it more palatable to match other types.

Mike Schmidt: Yeah, essentially the previous change, the previous update, affected that first transaction so that the change wasn’t as obvious. And then this PR that we’re talking about affects subsequent transactions that would happen with the change from that original transaction. And if you’re a little confused on this PR, Josie’s got a nice diagram and example in the PR that can help you kind of wrap your mind around these different changes that have made to coin selection.

Mark Erhardt: Cool. Next one?

Core Lightning #5071

Mike Schmidt: Yeah, next is a PR to Core Lightning (CLN), and it’s #5071, and it adds a bookkeeper plugin. So, CLN is plugin-based and that a lot of the functionality can be augmented or changed using these plugins. And so, this is a bookkeeper plugin. And essentially from what I can tell, it’s an accounting plugin, so you can sort of see all movements of the coins in and out, including fees, and then have some reporting around that for various reasons, including I suppose auditing and tax purposes could be use cases here, as well as just general analytics around your particular CLN node. I haven’t used it, so I can’t opine more than that. I don’t know, Murch, if you’ve used it, are you familiar with it?

Mark Erhardt: No, unfortunately not. We really need to get a Lightning expert up here too!

Mike Schmidt: Yeah, indeed. Maybe I’ll put the feelers out and see if somebody wants to join us for future. Two more here.

BDK #645

One is BDK. There’s a change to the way that taproot spends are signed for. So, before this change, BDK, which is the Bitcoin Development Kit, would sign for the keypath spend and then also any scriptpath leaves that it had the keys for. So, I guess it would just sign everything, as opposed to with this PR, as a way to specify specifically which of the spend paths you want to sign for instead of signing all of those different potential scriptpaths. So, in taproot you have the keypath spend and then you have these scriptpaths, and instead of signing all, you can specify exactly which one key scriptpath spend you would like to spend.

Mark Erhardt: That sounds like a good change!

BOLTs #911

Mike Schmidt: Yeah that seems reasonable. And then the last PR here is a PR to the BOLTs repository, which is essentially the LN spec. And the summary is that it, “Adds the ability for a node to announce a DNS hostname that resolves to the IP address”. And my understanding is part of the motivation there was that without this, you’re somewhat relying on the gossip network to get some of this information, and having this DNS entry adds a little bit more validation to some of the address information, as opposed to just having it and getting it through the gossip network. Murch, anything on BOLTs 911?

Mark Erhardt: Sorry, I must admit that I actually failed to look at it earlier tonight.

Mike Schmidt: Okay, no worries. Well, we’re a little bit over time anyways, so if anybody has a question, feel free to raise your hand or request speaker access and we can bring you in. Here we have one. Akhtar?

Mark Erhardt: Cool, you’re up here. You just have to unmute so we can hear you.

Mike Schmidt: Akhtar?

Akhtar Hussain: Hey, brothers, how are you? Good evening. This is Akhtar Hussain from Pakistan. So, I am interested in Bitcoin. So, can you kindly inform me what it is about and how can I benefit from it? I will be thankful.

Mike Schmidt: Just more broadly and using the Bitcoin software?

Mark Erhardt: I’ll try to cover it in two sentences, but I think that it might be a little too broad as a question for this meeting in general. So, generally Bitcoin is useful to send money to other people, and since it’s a global system it works to anybody on the planet and it tries to exhibit the properties of cash payments on the internet. So, there are a few privacy benefits and just more sovereignty to holding your own money. So, if that sounds interesting, you could for example try to find our, “I’m new to Bitcoin” topic on Bitcoin Stack Exchange. It’s, for example, linked on my profile. We go into a lot of different questions early users have, and there is also one that is about the key selling points of what Bitcoin can do for you, and I think it’s called, “How do you describe Bitcoin in a few sentences or so?” I’ll link it in the announcement of our meeting here. Okay, goodbye. Oh, you just unspeakified yourself, never mind!

Mike Schmidt: Fin.

Mark Erhardt: Okay, hi. Well, okay, I guess now that we’ve taken two questions, does anybody have something to say about wrapping up this meeting?!

Mike Schmidt: Gloria, would you like to make a sound effect noise as well?

Gloria Zhao: Not really!

Mike Schmidt: All right, well, thanks everybody for joining. Sorry that we weren’t able to get Tadge on verbally and we had to read some of his notes. It was great that Peter joined us, Gloria joined us, Larry joined us, Murch, thanks for doing this thing with me. And I hope you guys like the Thursday edition, giving everybody a little bit more time to consume the newsletter before we have this discussion. Any feedback, feel free to message myself or Murch, or reply to the Optech account with any ideas, and appreciate you all joining us and your curiosity into Bitcoin and some of the technicals. So, thanks everybody.

Gloria Zhao: Thank you.

Mark Erhardt: Yeah, cheers. Talk to you soon. Bye.