I am concerned that a possible practical improvement is getting lost in the theory discussion. With lots of factors to balance, there is a risk that any big change would lead to problems. No one wants that. But from what I understand, changing the target interval to 5 minutes would be safe. Max block size would be shrunk to 500KB, coins issued per block would be cut in half.
Lets take your arguments gmaxwell, and look at them in the context of this specific proposal.
(1) Orphaning rate depends on the time relative to communications & validation delay (formula given in the link). At the limit as the block-time goes to zero the network will stop converging and typical reorganizations tend to infinitely long. The actual delays depend on network topography and block size. And as an aside in the past we've seen global convergence times on Bitcoin get up to over two minutes, although the software performance has been improved since then it doesn't seem that there a ton of headroom before convergence failures would be likely in practice, certainly fast convergence is harder with larger blocks.
So the blocktime would be at 5 min in this case. The orphan rate would be higher, but I'm guessing it would it rise by more than 5% or 10%. And lets remember, the orphan rate is under 1% of all blocks, so the actual percentage of orphans would change from lets say 0.80% to something like 0.85%. I'm just making these numbers up, so let me know if you disagree or have better estimates of the actual values. I don't know to much about the convergence concept. I would guess that 500KB blocks every 5 minutes still be well within the margin of safety though.
(1a) There have been altcoins who didn't understand this and set their block times to be stupidly low and suffered pretty much instant convergence failure (e.g. liquidcoin). There are other ones that may start failing if they ever get enough transaction volume that validation actually takes a bit of time.
Good to know. Lets not do that! I don't think anyone would think 5 minutes is stupidly low (unless they were stupid?).
(2) The computational/bandwidth/storage cost of running a SPV node, or query a remote computation oracle for signing, or to present a bitcoin proof in a non-bitcoin chain is almost entirely due to the header rate. Going to 5 minutes, for example, would double these costs. Increasing costs for the most cost-sensitive usages is not very attractive.
This may be a good point. I don't know enough about how the headers work, but I'll try. Empty-block headers are about 80 bytes. If every block thus far had been empty, we would have ~20MB would of block headers since the genesis. That number would be ~40MB if it had been 5 mins from the start. A question: would the header-of-a-100-transaction-block + the header-of-an-empty-block be the same size as the two 50-transaction headers combined? If that is true, than the added header 'overhead' costs would seem to be reasonable, basically an additional 80 bytes every 10 minutes over what we generate now.
(3) With the exception of 1 confirmation transactions, once you are slow enough that orphaning isn't a major consideration there is no real security difference that depend on the particular rate. For moderate length attacks sum computation matters and how you dice it up doesn't matter much. One confirm security however isn't particular secure.
Seems like Meni is taking you up on the security side. Statistics aside, lets not forget the importance of that first confirmation! I've met dozens of people in coffee shops helping them to get some bitcoins. In purely human terms, there is a big difference between 5 and 10 minutes. 5 minutes is fast food, 10 is not. You expect putting gas in a car to take 5 minutes - 10 would be a drag. 5 minutes just feels a lot faster than 10. And since that first confirmation is way, way (maybe 100x?) more secure than an unconfirmed one, everything happening twice as fast would be very convenient for the bitcoin community as it is today. I agree that in the future there will be lots of solutions to these issues, but to get there from here we need to keep people happy and things convenient so that the community lives on.
Of course, if Meni is right, and I think he is, then you can multiply that savings if you need more confirmations. The current security provided by three confirmations (30 mins) could be replaced by four confirmations at 5 minutes (20 mins), and time savings will be afforded at any desired level of security.
(3a) If there is actually a demand for fast low security evidence of mining effort, you can achieve that simply by having miners publish shares like P2Pool does. You could then look at this data and estimate how much of the network hashrate is attempting to include the transaction you're interested in. This doesn't, however, create the orphaning/convergence problems of (1) or the bandwidth/storage impact on disinterested nodes of (2).
It's good there are options, but this is a very technical solution. Don't forget we want to make bitcoin better for even minimally technical users, so therefore it is not an argument against 5 minute blocktime.
(3b) Because mining is a stochastic lottery confirmations can take a rather long time even when the mean is small. Few things which you can describe as "needing" a 2 minute mean would actually still be happy with it taking 5 times that sometimes. Those applications simply need to use other mechanisms than global consensus as their primary mechanism.
The distribution curve doesn't change shape, but the timescale underneath it will be shrunk by a factor of two! Again, transactions where two people initiate the transaction and then wait it out, but that 1, 2 or 6 blocks. Whatever your number is, you will be waiting half as long on average. Adjusting to keep the security level the same would not result in a 50% times savings, but maybe 30%. Meni will tell you the exact amount.
(4) While you can debate the fine details of the parameters perhaps 20 minutes or 5 minutes would have been wiser because of the above none of the arguments are all that compelling. Changing this parameter would require the consent of all of the surviving Bitcoin users, absent a really compelling argument it simply isn't going to happen.
No one wants to wait longer. This is 99% a technical issue, and if the core dev team gives it's blessing, people will be very excited. Why not propose raising it to 20 minutes and see if there is a similar level of excitement. I tend to think we need a hard fork to prove to ourselves that we are dynamic community and can handle the challenge. With core dev support, consensus will easily be over 95%.
