Author Topic: How are bid collisions resolved?  (Read 2644 times)

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Offline bytemaster

It's all about transaction fees. Miners pick the transactions anyway ("oops I didn't see your bid!").

How much of any transaction is visible to miners?.. If there is anything visible ahead of their selecting it, how is this not a liability allowing evil miner to manipulate markets to their advantage??.. I'm no expert when it comes to what already exists as playing financial markets but I can imagine giving priority to ones own transactions could leverage quite a gain on any fluid market, it would be an invisible pump and dump; the miner would just be more efficient and gets confirmations - not quite HFT but similar outcome.

There is only one way a price can go: up. 

I suppose you could watch the network... see a bid for X... mine a block with your bid for less than X... then have the bid for X come in.   From the perspective of the user who made the bid for X... their costs are the same.   From the perspective of the prior bidder...they lose some profit.   From the perspective of the network it is the same.   

 
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Offline toast

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The whole transaction is visible. The "fee" and "dividend" are the same thing and is awarded to miners in proportion to their stake. So 99% of nodes will always just pick the highest bid. The only market manipulation you could do was if you knew that the highest bidder would buy a domain for 1.05 but not 1.10 DNS you could use a miner to exclude your 1.04 DNS and then "hold it hostage" by bidding it up to 1.10. The cost here is the dividends they could be collecting on those 1.10 while they try to sell it back, or somehow make it generate at least that much income while they hold it.
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Offline davidpbrown

It's all about transaction fees. Miners pick the transactions anyway ("oops I didn't see your bid!").

How much of any transaction is visible to miners?.. If there is anything visible ahead of their selecting it, how is this not a liability allowing evil miner to manipulate markets to their advantage??.. I'm no expert when it comes to what already exists as playing financial markets but I can imagine giving priority to ones own transactions could leverage quite a gain on any fluid market, it would be an invisible pump and dump; the miner would just be more efficient and gets confirmations - not quite HFT but similar outcome.
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Offline toast

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It's all about transaction fees. Miners pick the transactions anyway ("oops I didn't see your bid!").

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Offline biophil

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Let's say bitcoin.p2p is being auctioned, and the current price is 10 DNS. For the sake of argument, let's assume that the minimum bid increment is 10%, so the lowest possible bid in the auction is 11 DNS. So I come along, and I have no interest in owning bitcoin.p2p, but I want to get a piece of the auction pie, so I enter a bid. To maximize the amount that I earn from whoever outbids me, I enter the minimum bid, 11. Then someone comes along and outbids me (the next minimum bid is 12.1), I take my 5% earnings, and go home happy. But what if a lot of people do this?

My guess is that minimum bids will be pretty common near the end of an auction, as lots of people enter the minimum bid to maximize their payoff. Which one of these people actually gets their bid entered in the auction? Will bid timestamps be accurate enough to ensure fairness?

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