layout: post

title: Pettycoin Revisited Part VII: Payback

commentIssueId: 42

Lacking the ability to mint coins, rewarding miners for a sidechain is

difficult. Relying on fees in the initial stages is not possible, and

using fees provides a disincentive for actually *using* the network.

To solve this problem, pettycoin allows transactions to flag themselves

as feeless, with the understanding that miners may not include such

transactions. It also mines the future to pay for the present: 25%

of the fees from block N+(X-years) would get paid to block N. The

actual number of years was to be selected by an on-blockchain election

conducted at the 1 year mark.

The problem with this is that it requires the retention of all old

block headers, even before the horizon (otherwise we could use compact

SPV proofs for those headers). A further lottery process could select

an agreed subset, however.

A similar idea was suggested in the

[sidechains whitepaper](http://www.blockstream.com/sidechains.pdf),

via a different mechanism: that old miners would have the right to

mine a block with lower difficulty in the future. In some ways this

is nicer, since the easy miner could provide proof of their old block

using a compact SPV proof. Also, if the ability to mine an easy block

is part of the UTXO set, UTXO commitments can provide protection

against double-spends.

This introduces the issue that some party could flood the chain with

easy blocks; perhaps instead each block would only be (say) 25% easier

than normal, rather than ridiculously easy. The miner could then

sell the use of their private key.

Weak blocks make checking significantly more complex, but I'd have to

implement it to really know how bad it was. It fits fairly nicely

into the bitcoin model of inputs and outputs, however.