One of bitcoin's core value propositions is that no matter what, if you pay a high enough fee, some miner in the world will confirm your transaction. In other words, bitcoin is censorship resistant. There is a very good reason why the phrase “censorship-resistant” is the phrase you hear every time this topic comes up, not “censorship-proof.” Any individual miner can censor whatever he wants, in the sense that he can refuse to include something in any block he mines. However, they cannot prevent other miners from including that transaction in their own blocks whenever they find one.
bitcoin resists censorship, but is not immune to it. Any miner can censor whatever they want, and that's for free, ignoring, of course, the possible opportunity cost of lost revenue if there are not enough transactions available by paying a fee comparable to the transactions they decide to censor. But this doesn't stop the global system from processing that transaction anyway, unless those miners 1) understand the majority of the entire network hash rate, 2) choose to take advantage of that reality to orphan any miner's block you decide to process the transaction(s) you wish to censor.
Doing this would cause the majority of miners involved in the orphan attack to lose money, as long as the minority set of miners continued to mine blocks that included the “forbidden” transaction. Each time such a block was found, it would essentially increase the time until the next block entering the chain was found, reducing the income of most censoring miners on average. This would remain the case until the minority gave up and capitulated or ran out of business (as they would be giving up revenue on any block, including the censored transaction as well).
For now, let's assume that this scenario is not planned. If it were, bitcoin is either a failure or must exist in this state until uncensored miners can quietly accumulate enough hashrate to overpower the current majority intention to orphan blocks containing transactions they do not want confirmed on the blockchain. .
So what happens when a set of miners, in the minority, decide that they are going to censor a specific subset of transactions in their blocks? The amount of block space available for those transactions is reduced. They have less block space available than any other class of transactions. What is the end result of this? Fee pressure for this class of transactions will reach saturation faster than any other class of transactions.
To simplify the example, imagine that only 10 transactions are needed to fill a given block. We will call regular transactions simply “regular transactions” and censored transactions “prohibited transactions.” Every day, on average, five blocks are found and there are five miners. Red blocks represent miners that will not perform prohibited transactions, and green blocks represent miners that will. For regular transactions to saturate the available block space and start increasing fees, there needs to be more than 50 pending transactions for the bidding frenzy to start increasing fees and increase revenue for miners. At this point, the fee generated revenue for all Miners will start to increase.
For prohibited transactions, there only need to be more than 20 pending transactions for a bidding frenzy to begin between them, increasing fee revenue. But commission income from prohibited transactions It will only be collected by green miners..
In a situation where banned transactions do not saturate mempools beyond the block capacity available to them, all miners will earn the same approximate level of income. Those banned transactions must compete with regular transactions to have any guarantee of timely confirmation, so if regular transactions are flooding the mempool but banned transactions are not, the overall fee pressure will be distributed relatively evenly across all miners. and no one will bear any disproportionate cost. fee income is not available to others.
However, if banned transactions are flooding the mempool beyond the available block space, that fee pressure will increase the fees paid for banned transactions. only for green miners. Having chosen to censor these transactions, red miners will not see any increase in fee revenue from banned transactions. Regular transactions in this scenario will not have to compete with banned transactions on fees unless they need to be confirmed in the next block, so the indirect increase in fees on regular transactions due to fee pressure from banned transactions will not lead to an equivalent increase in income for red miners.
This imbalance causes green miners to earn more revenue per block/hash than red miners. This is, from an incentives point of view, obviously unsustainable. One of two things will happen over time: 1) either the green miners will reinvest the additional income they are acquiring and expand their hashrate percentage, or 2) the miners will defect to the red side and the pool of green miners will grow as a percentage of the hashrate. that way.
This dynamic of higher fees for green miners will result in growth of the green miners' hashrate, regardless of whether through reinvestment or attrition by red miners, until it reaches an equilibrium where the demand for space of blocks from prohibited transactions is leveled with regular transactions, and Both groups of miners earn approximately the same income. This equilibrium will last until the block space demand of the banned transactions exceeds that available to them, and then the whole dance of green miners earning more until they grow the share in the network hash rate to a point of balance of income for equal rates again.
This dynamic is why bitcoin is censorship resistant. Not because all miners are not capable of censoring something, but because miners are incentivized to include something that other miners are censoring through market dynamics. If some miners censor a class of transactions, they decrease the amount of block space available and increase the fees they are willing to pay. Pure and simple. Unless miners are completely irrational, in which case bitcoin's entire security model is called into question, some will include these transactions and earn additional income.
