news251: why do we have a mempool?

Author: glozow

_includes/specials/policy/en/01-why-mempool.md

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   if uncertain about anything, just do what seems best and harding will edit
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-FIXME:glozow
+Many nodes on the Bitcoin network store unconfirmed transactions in an
+in-memory pool, or _mempool_. This cache is an important resource
+for each node and enables the peer-to-peer transaction relay network.
+
+Nodes that participate in transaction relay
+download and validate blocks gradually rather than in spikes.
+Every ~10 minutes when a block is found, nodes without a mempool
+experience a bandwidth spike, followed by a computation-intensive
+period validating each transaction.  On the other hand, nodes with a
+mempool have typically already seen all of the block's transactions and
+store them in their mempools. With [compact block relay][topic compact
+block relay], these nodes just download a block header along with shortids,
+and then reconstruct the block using transactions in their mempools.
+The amount of data used to relay compact blocks is tiny compared to
+the size of the block. Validating the transactions is
+also much faster: the node has already verified (and cached)
+signatures and scripts, calculated the timelock requirements, and
+loaded relevant UTXOs from disk if necessary. The node can also
+forward the block onto its other peers promptly, dramatically
+increasing network-wide block propagation speed and thus reducing the
+risk of stale blocks.
+
+Mempools can also be used to build an independent fee estimator. The
+market for block space is a fee-based auction, and keeping a mempool
+allows users to have a better sense of what others are bidding and
+what bids have been successful in the past.
+
+However, there is no such thing as "the mempool"---each node may
+receive different transactions. Submitting a transaction to one node
+does not necessarily mean that it has made its way to miners. Some
+users find this uncertainty frustrating, and wonder, "why don't we
+just submit transactions directly to miners?"
+
+Consider a Bitcoin network in which all transactions are sent directly
+from users to miners. One could censor and surveil financial activity
+by requiring the small number of entities to log the IP addresses
+corresponding to each transaction, and refuse to accept any
+transactions matching a particular pattern. This type of Bitcoin may
+be more convenient at times, but would be missing a few of Bitcoin's
+most valued properties.
+
+Bitcoin's censorship-resistance and privacy come from its peer-to-peer
+network. In order to relay a transaction, each node may connect to
+some anonymous set of peers, each of which could be a miner or
+somebody connected to a miner. This method helps obfuscate which node
+a transaction originates from as well as which node may be responsible
+for confirming it. Someone wishing to censor particular entities may
+target miners, popular exchanges, or other centralized submission
+services, but it would be difficult to block anything completely.
+
+The
+general availability of unconfirmed transactions also helps minimize
+the entrance cost of becoming a block producer---someone who is
+dissatisfied with the transactions being selected (or excluded)
+may start mining immediately.
+Treating each node as an equal candidate for transaction broadcast
+avoids giving any miner privileged access to transactions and their
+fees.
+
+In summary, a mempool is an extremely useful cache that allows nodes
+to distribute the costs of block download and validation over time,
+and gives users access to better fee estimation. At a network level,
+mempools support a distributed transaction and block relay network.
+All of these benefits are most pronounced when everybody sees all
+transactions before miners include them in blocks - just like any
+cache, a mempool is most useful when it is "hot" and must be limited in size
+to fit in memory.
+Next week's section will explore the use of incentive compatibility as
+a metric for keeping the most useful transactions in mempools.