I was listening today to their conversation about the transcation fees in Bitcoin and Michael Sailor's understanding stroke me as inaccurate. Is there any direct incentive within the Bitcoin protocol itself to lower the fees? I've found some people on the Web who claim that including a small number of feeless transactions is incentivized, allegedly in order to decrease the difficulty of finding the nonce. I'm not sure about this matter - hence the question.
I'm aware of a range of indirect incentives like the incentive to try to keep Bitcoin users away from using other blockchains. There is also the incentive to collect as much with fees as possible in order to reinvest it in ASIC and the infrastructure. Such indirect incentives are outside of the scope of this question.
From what I read, the inner workings of mining are the following:
- New transactions are broadcast to all nodes.
- Each node collects new transactions into a block.
- Each node works on finding a difficult proof-of-work for its block.
- When a node finds a proof-of-work, it broadcasts the block to all nodes.
- Nodes accept the block only if all transactions in it are valid and not already spent.
- Nodes express their acceptance of the block.
First, a miner takes the transactions and their fees (step 2), and only after this step they compute their POW (step 3). However low the block reward, it is still the fact of solving the puzzle that determines which node is going to confirm their block. I've found nothing in the whitepaper that suggests that there is any relation between the fees of the transactions that were collected and the likelihood of computing the POW.
There seems to be nothing baked into the protocol that can directly stop any miner from producing let's say almost empty blocks or blocks with transaction fees of their preference so long as they are winning POW contest and the transactions are valid. Decades ahead in the world of diminished block rewards any miner's attitude towards the transaction fees does not give them any competitive advantage over another in finding the nonce... is my understanding correct?