<unnamed>

Public Key

npub1dalwmzu6f0yqdl0cy8qeaa6zcrzkara3jh8jjv7zky5s0tuypatsu07r9n

Profile Code

nprofile1qqsx7lhd3wdyhjqxlhuzrsv77apvp3tw37cetnefx0ptz2g847zq74cprpmhxue69uhhyetvv9ujuumwdae8gtnnda3kjctvqy28wumn8ghj7un9d3shjtnyv9kh2uewd9hszrthwden5te0dehhxtnvdakqhugqpy

Publishing to

relay.snort.social

relay.damus.io

nos.lol

Last Notes

2023-06-07 23:21:56 UTC

- reply

📅 Original date posted:2023-05-26
🗒️ Summary of this message: Unable to provide a summary as the text is not provided.
📝 Original message:An HTML attachment was scrubbed...
URL: <http://lists.linuxfoundation.org/pipermail/bitcoin-dev/attachments/20230526/dc200fd3/attachment-0001.html>

2023-06-07 23:18:07 UTC

- reply

📅 Original date posted:2023-01-21
🗒️ Summary of this message: A conservative proposal to address the potential disruption caused by halving in Bitcoin mining suggests waiting for the hashrate to recover before executing the next halving.
📝 Original message:This is the phrase that should be recalled very often:
"the total reward per transaction is Three Orders of Magnitude
higher than typical fees. Sufficient fee increases to bring back hashing power
in a scenario like that would cause Enormous Disruption to many things,
including Lightning channels"
> Your proposal does not address that problem as it can only measure difficulty prior to the halving point
Yes, my proposal of fixing the inevitable (but only spreaded over the long time) failure - is quite conservative, surprisingly.
Simplifying it to the edge case:
If in a four-year perspective there is no the average price +100% increase - to properly compensate last halving,
but instead there is a hashrate -50% drop - another possible and "proper" (!) compensation
- absolutely don't worse the situation by executing next halving,
accept such drop because there is nothing you can do about it
and wait with halvings for the hashrate to recover. As long as it takes.
Maybe even 20 years if necessary (fortunately we are at mature phase of ASIC technology right now),
And iterate.
This way we land at lowest possible annual inflation and set by a free market.
As I said this is quite conservative approach. It would suit bitcoin,.
Too bad it wasn't foreseen at the beginning...
W dniu 2023-01-18 21:58:15 użytkownik Peter Todd <pete at petertodd.org> napisał:
> On Sun, Jan 01, 2023 at 11:42:50PM +1100, Alfie John wrote:
> On 31 Dec 2022, at 10:28 am, Peter Todd via bitcoin-dev <bitcoin-dev at lists.linuxfoundation.org> wrote:
> >
> >> This way:
> >>
> >> 1. system cannot be played
> >> 2. only in case of destructive halving: system waits for the recovery of network security
> >
> > The immediate danger we have with halvings is that in a competitive market,
> > profit margins tend towards marginal costs - the cost to produce an additional
> > unit of production - rather than total costs - the cost necessary to recover
> > prior and future expenses. Since the halving is a sudden shock to the system,
> > under the right conditions we could have a significant amount of hashing power
> > just barely able to afford to hash prior to the halving, resulting in all that
> > hashing power immediately having to shut down and fees increasing dramatically,
> > and likely, chaotically. Your proposal does not address that problem as it can
> > only measure difficulty prior to the halving point.
>
>
> > ... Since the halving is a sudden shock to the system
>
> Is it though? Since everyone knows of the possible outcomes, wouldn't a possible halving be priced in?
Re-read that I said. That explains why despite the halving being a forseeable
event, there's no mechanism to "price it in" when it comes to hashing power.
> > resulting in all that hashing power immediately having to shut down and fees increasing dramatically
>
> Which should cause that hashing power to come back because of this fee increases.
Right now the total reward per transaction is $63, three orders of magnitude
higher than typical fees. Sufficient fee increases to bring back hashing power
in a scenario like that would cause enormous disruption to many things,
including Lightning channels.
--
https://petertodd.org 'peter'[:-1]@petertodd.org

2023-06-07 23:18:05 UTC

- reply

📅 Original date posted:2023-01-07
🗒️ Summary of this message: Bitcoin's security relies heavily on coinbase rewards, with fees contributing only about 13%. An emergency mechanism may be needed to prevent global hashrate regression.
📝 Original message:> Anyways if it turns out that fees alone don't look like they're supporting enough security, we have a good amount of time to come to that conclusion and do something about it.
The worst-case scenario is that the first global hashrate regression may take place in 2028.
Instead of the average price increase at least x2 every halving - the global hashrate may gradually decrease from that point. Again, it would be the worst-case scenario.
In my proposal you don't need to think about any calculations - just simple logic which we have right now. No hardcoded values and the free market in its finest - self-regulating the level of taxation of parties involved, but with opposite interests. And the mechanism would try to fix a global hashrate regression if appear.
In other words: let's be optimistic regarding fees, but with emergency mechanism built-in just in case.
The only drawback here is that the system is already running.
In my personal opinion avoiding long-term global hashrate regression is more important for store of value feature than the 21M schelling point (or trap...)
W dniu 2023-01-04 17:03:33 użytkownik Billy Tetrud <billy.tetrud at gmail.com> napisał:
> In Bitcoin "the show must go on" and someone must pay for it. Active [and/or] passive users
I certainly agree.
> or more precisely: tiny inflation
👍
> Right now security comes from almost fully from ~1.8% inflation.
Best I could find, fees make up about 13% of miner revenue. So yes, the vast majority of security comes from coinbase rewards. I assume you're implying that ~13% of today's security is not enough? I would love to see any quantitative thoughts you have on how one might determine that.
Have there been any thoughts put out in the community as to what size of threat is unlikely enough to arise that we don't need to worry about it? Maybe 1% of the yearly government budgets of the world would be an upper bound on how much anyone would expect could realistically be brought to bear? Today that would be maybe around $350 billion.
Or perhaps a better way to estimate would be calculating the size of the motivation of an attacker. For example, this paper seems to conclude that the US government was extracting a maximum of ~$20 billion/year in 1982 dollars (so maybe $60 billion/year in 2022 dollars if you go by CPI). If we scale this up to the entire world of governments, this seems like it would place an upper bound of $180 billion/year of seigniorage extraction that would be at risk if bitcoin might put the currencies they gain seigniorage from out of business. Over 10 years (about as far as we can expect any government to think), that's almost $2 trillion.
Whereas it would currently cost probably less than $7 billion to purchase a 50% share of bitcoin miners. To eventually reach a level of $350 billion, bitcoin's price would need to reach about $800,000 / bitcoin. That seems within the realm of possibility. To reach a level of $2 trillion, you'd need a price of $4.3 million/bitcoin. That's still probably within the realm of possibility, but certainly not as likely. If you then assume we won't have significant coinbase rewards by that point, and only 13% of the equivalent revenue (from fees) would be earned, then a price of ~$6 million would be needed to support a $350 billion and $34 million to support a $2 trillion security. I think that second one is getting up towards the realm of impossibility, so if we think that much security is necessary, we might have to rethink things. Its also quite possible, as the network of people who accept and use bitcoin as payment grows, that the fee market will grow superlinearly in comparison to market cap, which would make these kind of high levels of security more realistic.
Anyways if it turns out that fees alone don't look like they're supporting enough security, we have a good amount of time to come to that conclusion and do something about it.
> Deflation in Bitcoin is not 1:1 matter like in gold, for example... Deflation in Bitcoin is more complex issue
It's helpful to keep our language precise here. Price inflation and deflation act identically in bitcoin and gold and anything else. What you seem to be talking about at this point is monetary inflation (specifically, a reduction in it) which of course operates differently on the machinery of bitcoin than it does in the machinery of gold or other things. Whereas my comment about you mentioning Gresham's law was specifically talking about price inflation, not the effects of the coin emission machinery in bitcoin.
_______________________________________________
bitcoin-dev mailing list
bitcoin-dev at lists.linuxfoundation.org
https://lists.linuxfoundation.org/mailman/listinfo/bitcoin-dev

2023-06-07 23:18:03 UTC

- reply

📅 Original date posted:2023-01-02
🗒️ Summary of this message: Bitcoin's deflation is more complex than in gold, with repercussions for network security. Delaying halvings may be better than not, but won't solve the problem.
📝 Original message:Right now security comes from almost fully from ~1.8% inflation.
In November mempool was inflated to ~150MB and people were rather waiting for cheap transactions back.
Instead of being happy that system is closer for a while to default working area.
Deflation in Bitcoin is not 1:1 matter like in gold, for example.
If all plain gold available to mine would be finished - gold mines as unprofitable enterprices are immediately closed.
And it doesn't affect security of gold already in circulation.
In Bitcoin "the show must go on" and someone must pay for it.
Active and passive users together (balanced by market play) or: only active users (in current scenario, long-term).
Deflation (or more precisely: tiny inflation) in Bitcoin is more complex issue with more repercussions than in gold.
In case of drop of network security - the tax will be paid anyway, in Bitcoin price.
So, there is an self-regulating mechanism here. The harsh one, but still.
W dniu 2023-01-02 05:53:57 użytkownik Billy Tetrud <billy.tetrud at gmail.com> napisał:
> is surely better than not delaying it.
I might agree, but I don't think it really solves the problem well enough to be worth it. Any solution that would solve the problem better would make delaying halvings unnecessary.
> there is non-zero risk that people will hoard it more and more, according to old Gresham's law
Gresham's law doesn't apply here. Gresham's law is about the interaction between two currencies with a fixed, usually government-enforced exchange rate. You seem to be saying that Bitcoin will be hoarded because Bitcoin inflation reduces every halving. But even with 0 inflation, it certainly won't cause all Bitcoin to be hoarded. Also, "hoarding" is also known as "saving", and there's nothing wrong with saving. The spectre of deflation comes from a misunderstanding of deflation and why it happens during bad economic times. It is an effect, not a cause.
On Sun, Jan 1, 2023, 15:23 <jk_14 at op.pl> wrote:
Yes, the idea is:
if mining activity is growing - let's execute consecutive halvings
but if miner exodus has happened - let's delay next halving until mining activity is recovered to previous levels
If it gets to the point where a sudden drop in mining difficulty happens - delaying the next halving may be not sufficient to correct, but is surely better than not delaying it.
While Bitcoin is better and better money with every halving in comparision to other types of money - there is non-zero risk that people will hoard it more and more, according to old Gresham's law ("HODL"). And this way decreasing liquidity / transactions volume. The positive feedback loop - is my real concern here.
Regarding the relationship between difficulty and security - I fully agree.
But ASIC technology is already matured. And also any technology breakthrough is a short event within 4 years period.
So growth of difficulty could be gained by technology breakthrough, but any sudden drop of difficulty would be always an issue, while there is no such thing as: ASIC technology regression.
Obviously, not complicated solution would be better than complicated one.
W dniu 2022-12-30 19:21:10 użytkownik Billy Tetrud <billy.tetrud at gmail.com> napisał:
If the idea is to ensure that a catastrophic miner exodus doesn't happen, the "difference" you're calculating should only care about downward differences. Upward differences indicate more mining activity and so shouldn't cause a halving skip.
But I don't think any scheme like this that only acts on the basis of difficulty will be sufficient. If it gets to the point where a sudden drop in mining difficulty happens, it is very likely that simply delaying the next halving or even ending halving all together will not be sufficient to correct for whatever is causing hashrate to tank. There is also the danger of simple difficulty stagnation, which this mechanism wouldn't detect.
The relationship between difficulty and security becomes less and less predictable the longer you want to look ahead. There's no long term relation between difficulty and any reasonable security target. A security target might be something like "no colluding group with less than $1 trillion dollars at their disposal could successfully 51% attack the network (with a probability of blah blah)". There is no way to today program in any code that detects based on difficult alone when that criteria is violated. You would have to program in assumptions about the cost of hashrate projected into the future.
I can't think of any robust automatic way to do this. I think to a certain degree, it will have to be a change that happens in a fork of some kind (soft or hard) periodically (every 10 years? 30 years?). The basic relations needed is really the cost in Bitcoin of the security target (ie the minimum number of Bitcoin it should take to 51% attack the system) and the cost in Bitcoin of acquiring a unit of hashrate. This could be simply input into the code, or could use some complicated oracle system. But with that relation, the system could be programmed to calculate the difficulty necessary to keep the system secure.
Once that is in place, the system could automatically adjust the subsidy up or down to attract more or less miners, or it could adjust the block size up or down to change the fee market such that more or less total fees are collected each block to attract more or less miners.
On Tue, Dec 27, 2022, 09:41 Jaroslaw via bitcoin-dev <bitcoin-dev at lists.linuxfoundation.org> wrote:
It seems like the more elegant solution could be by using a chainwork parameter instead.
i.e. comparison just before halving - if the last 210,000 block interval has a higher chainwork difference between the begining and the end of interval
than any other such inter-halving interval before.
LIttle digression yet:
A system in which all users participate in ensuring its security looks better than one in which only some (i.e. active) of them participate (and passive stakeholders are de facto free riders)
In my opinion this concept above is only the complement of currently missing mechanism: achieving equilibrium regarding costs of security between two parties with opposing interests.
It's easy to understand and - most important - it has no hardcoded value of tail emission - what is the clear proof it is based on a free market.
And last but not least, if someone is 100% sure that income from transactions will takeover security support from block subsidy - accepting such proposal is like putting the money where the mouth is: this safety measure will never be triggered, then (no risk of fork)
Best Regards
Jaroslaw
W dniu 2022-12-23 20:29:20 użytkownik Jaroslaw via bitcoin-dev <bitcoin-dev at lists.linuxfoundation.org> napisał:
>
Necessary or not - it doesn't hurt to plan the robust model, just in case. The proposal is:
Let every 210,000 the code calculate the average difficulty of 100 last retargets (100 fit well in 210,000 / 2016 = 104.166)
and compare with the maximum of all such values calculated before, every 210,000 blocks:
if average_diff_of_last_100_retargets > maximum_of_all_previous_average_diffs
do halving
else
do nothing
This way:
1. system cannot be played
2. only in case of destructive halving: system waits for the recovery of network security
Best Regards
Jaroslaw
_______________________________________________
bitcoin-dev mailing list
bitcoin-dev at lists.linuxfoundation.org
https://lists.linuxfoundation.org/mailman/listinfo/bitcoin-dev
_______________________________________________
bitcoin-dev mailing list
bitcoin-dev at lists.linuxfoundation.org
https://lists.linuxfoundation.org/mailman/listinfo/bitcoin-dev

2023-06-07 23:18:02 UTC

- reply

📅 Original date posted:2023-01-01
🗒️ Summary of this message: A proposal for a halving system based on average difficulty is suggested, but it does not address the immediate danger of profit margins and hashing power. A demurrage soft-fork may be a more plausible solution.
📝 Original message:Is a storage fee averaged out over many future blocks - but not hardcoded value and regulated by a free market?
The problem with demurrage I see is that the fee is taken when you spend. There is no additional income for miners if people are still hoarding.
In tail emission even if people are still hoarding - the fee is taken immediately and is distributed to miners.
We have a hope there is still the global adoption ahead (most of countries are like El Salvador). It may increase price and marketcap of Bitcoin by order of magnitude.
And that's why hoarding in demurrage may still exist: due to extremely appealing long-term risk/reward (i.e. relatively small, delayed tax versus huge possible profit)
W dniu 2022-12-31 00:29:08 użytkownik Peter Todd <pete at petertodd.org> napisał:
> On Fri, Dec 23, 2022 at 07:43:36PM +0100, jk_14 at op.pl wrote:
>
> Necessary or not - it doesn't hurt to plan the robust model, just in case. The proposal is:
>
> Let every 210,000 the code calculate the average difficulty of 100 last retargets (100 fit well in 210,000 / 2016 = 104.166)
> and compare with the maximum of all such values calculated before, every 210,000 blocks:
>
>
> if average_diff_of_last_100_retargets > maximum_of_all_previous_average_diffs
> do halving
> else
> do nothing
>
>
> This way:
>
> 1. system cannot be played
> 2. only in case of destructive halving: system waits for the recovery of network security
First of all - while I suspct you already understand this issue - I should
point out the following:
The immediate danger we have with halvings is that in a competitive market,
profit margins tend towards marginal costs - the cost to produce an additional
unit of production - rather than total costs - the cost necessary to recover
prior and future expenses. Since the halving is a sudden shock to the system,
under the right conditions we could have a significant amount of hashing power
just barely able to afford to hash prior to the halving, resulting in all that
hashing power immediately having to shut down and fees increasing dramatically,
and likely, chaotically. Your proposal does not address that problem as it can
only measure difficulty prior to the halving point.
Other than that problem, I agree that this proposal would, at least in theory,
be a positive improvement on the status quo. But it is a hard fork and I don't
think there is much hope for such hard forks to be implemented. I believe that
a demmurrage soft-fork, implemented via a storage fee averaged out over many
future blocks, has a much more plausible route towards implementation.
--
https://petertodd.org 'peter'[:-1]@petertodd.org

2023-06-07 23:18:01 UTC

- reply

📅 Original date posted:2023-01-01
🗒️ Summary of this message: Delaying halvings during a miner exodus may not be sufficient to correct a sudden drop in mining difficulty, and there is a risk of hoarding decreasing liquidity. The relationship between difficulty and security is unpredictable, and a robust automatic solution may require periodic changes in a fork.
📝 Original message:Yes, the idea is:
if mining activity is growing - let's execute consecutive halvings
but if miner exodus has happened - let's delay next halving until mining activity is recovered to previous levels
If it gets to the point where a sudden drop in mining difficulty happens - delaying the next halving may be not sufficient to correct, but is surely better than not delaying it.
While Bitcoin is better and better money with every halving in comparision to other types of money - there is non-zero risk that people will hoard it more and more, according to old Gresham's law ("HODL"). And this way decreasing liquidity / transactions volume. The positive feedback loop - is my real concern here.
Regarding the relationship between difficulty and security - I fully agree.
But ASIC technology is already matured. And also any technology breakthrough is a short event within 4 years period.
So growth of difficulty could be gained by technology breakthrough, but any sudden drop of difficulty would be always an issue, while there is no such thing as: ASIC technology regression.
Obviously, not complicated solution would be better than complicated one.
W dniu 2022-12-30 19:21:10 użytkownik Billy Tetrud <billy.tetrud at gmail.com> napisał:
If the idea is to ensure that a catastrophic miner exodus doesn't happen, the "difference" you're calculating should only care about downward differences. Upward differences indicate more mining activity and so shouldn't cause a halving skip.
But I don't think any scheme like this that only acts on the basis of difficulty will be sufficient. If it gets to the point where a sudden drop in mining difficulty happens, it is very likely that simply delaying the next halving or even ending halving all together will not be sufficient to correct for whatever is causing hashrate to tank. There is also the danger of simple difficulty stagnation, which this mechanism wouldn't detect.
The relationship between difficulty and security becomes less and less predictable the longer you want to look ahead. There's no long term relation between difficulty and any reasonable security target. A security target might be something like "no colluding group with less than $1 trillion dollars at their disposal could successfully 51% attack the network (with a probability of blah blah)". There is no way to today program in any code that detects based on difficult alone when that criteria is violated. You would have to program in assumptions about the cost of hashrate projected into the future.
I can't think of any robust automatic way to do this. I think to a certain degree, it will have to be a change that happens in a fork of some kind (soft or hard) periodically (every 10 years? 30 years?). The basic relations needed is really the cost in Bitcoin of the security target (ie the minimum number of Bitcoin it should take to 51% attack the system) and the cost in Bitcoin of acquiring a unit of hashrate. This could be simply input into the code, or could use some complicated oracle system. But with that relation, the system could be programmed to calculate the difficulty necessary to keep the system secure.
Once that is in place, the system could automatically adjust the subsidy up or down to attract more or less miners, or it could adjust the block size up or down to change the fee market such that more or less total fees are collected each block to attract more or less miners.
On Tue, Dec 27, 2022, 09:41 Jaroslaw via bitcoin-dev <bitcoin-dev at lists.linuxfoundation.org> wrote:
It seems like the more elegant solution could be by using a chainwork parameter instead.
i.e. comparison just before halving - if the last 210,000 block interval has a higher chainwork difference between the begining and the end of interval
than any other such inter-halving interval before.
LIttle digression yet:
A system in which all users participate in ensuring its security looks better than one in which only some (i.e. active) of them participate (and passive stakeholders are de facto free riders)
In my opinion this concept above is only the complement of currently missing mechanism: achieving equilibrium regarding costs of security between two parties with opposing interests.
It's easy to understand and - most important - it has no hardcoded value of tail emission - what is the clear proof it is based on a free market.
And last but not least, if someone is 100% sure that income from transactions will takeover security support from block subsidy - accepting such proposal is like putting the money where the mouth is: this safety measure will never be triggered, then (no risk of fork)
Best Regards
Jaroslaw
W dniu 2022-12-23 20:29:20 użytkownik Jaroslaw via bitcoin-dev <bitcoin-dev at lists.linuxfoundation.org> napisał:
>
Necessary or not - it doesn't hurt to plan the robust model, just in case. The proposal is:
Let every 210,000 the code calculate the average difficulty of 100 last retargets (100 fit well in 210,000 / 2016 = 104.166)
and compare with the maximum of all such values calculated before, every 210,000 blocks:
if average_diff_of_last_100_retargets > maximum_of_all_previous_average_diffs
do halving
else
do nothing
This way:
1. system cannot be played
2. only in case of destructive halving: system waits for the recovery of network security
Best Regards
Jaroslaw
_______________________________________________
bitcoin-dev mailing list
bitcoin-dev at lists.linuxfoundation.org
https://lists.linuxfoundation.org/mailman/listinfo/bitcoin-dev
_______________________________________________
bitcoin-dev mailing list
bitcoin-dev at lists.linuxfoundation.org
https://lists.linuxfoundation.org/mailman/listinfo/bitcoin-dev
-------------- next part --------------
An HTML attachment was scrubbed...
URL: <http://lists.linuxfoundation.org/pipermail/bitcoin-dev/attachments/20230101/b43f2863/attachment.html>

2023-06-07 23:12:43 UTC

- reply

📅 Original date posted:2022-08-15
📝 Original message:> New blog post:
> https://petertodd.org/2022/surprisingly-tail-emission-is-not-inflationary
Tail emission is inevitable, Milton Friedman says...
The key thing here in my opinion is to properly understand the seriousness of the situation.
"There is no such thing as a free lunch" - is definitely helpful quote here.
There are two edge cases.
1. while starting given cryptocurrency
- the annual inflation is huge, nobody (in developed/mature monetary system) would like to keep such kind of money with e.g. 100% annual inflation rate, but from the other side there is no problem for transaction fee to be free of charge here
2. while given cryptocurrency is switching off the block reward, in supposed "mature phase":
- the annual inflation is zero, everyone want to hoard such money, transaction fees must carry the whole security of the system
In the first edge case: active users have got "free lunches" and passive users (i.e. holders) are paying for it (by "inflation tax")
In the second edge case: passive users have got "free lunches" and active users should pay for it (by "transactional tax")
So far I only highlighted some maybe not very well recognized, but pure facts (it's not comfortable to contradict the facts...)
The reason people do pay in the first phase - is a hope/promise of system growth (future coin price appreciation = profit)
The problem in the second phase is that there is no real incentive for people to pay for other's free lunches.
Any wishful thinking that most (or even: any significant part) of holders will resign from a free lunch and will buy and run ASIC mining equipment at loss - is just a delusional perspective. It's well proven by game theory and what says us the Prisoner's Dilemma about it. For better understanding - here is my modified version of Prisoner's Dilemma short description:
"The Prisoner's Dilemma is a standard example of a game analyzed in game theory that shows why completely rational large holders might not cooperate, even if it appears that it is in their best interests to do so."
I'm pretty sure we will have a textbook case of Prisoner's Dilemma here.
As a useful example - let's assume that fees don't compensate low block reward. Btw, right now a single transaction fee need to be $60 to compensate that (and it will only get worse in time). System is not inclusive with $60 per transaction fee. Only rich people will use it. Another possible scenario is a x100 drop of network hashrate to catch a previous fee levels. The network is x100 less secure, then. It really doesn't matter if this process is spread over the long run...
So, for example - let every 10 BTC holding needs to be secured by one Antminer S19 running.
In an ideal world every large bitcoin holder will run proper amount of ASICs and run it at loss.
The holders of less than 10 BTC - will organize "group pays", this time for sharing loss (electricity costs)
Exactly the same way like people made "group buys" of ASIC hardware in 2013.
I hope it's clear that in the real world it WILL NOT work. People will simply think, that there is only a tiny punishment for betrayal.
Noone will waste his renewable energy on unprofitable Antminer while he/she can sell this energy for the market price. Even Bitcoin can't beat the human nature.
Thanks to Milton Friedman - we can easily say that situation with "free lunches" (at least for some part of users) - is an unhealthy state of financial system.
And may last only exceptionally for short period of time, and definitely not as a default state. System must be sustainable and time to accept that there is a real problem here (or: an elephant in the room - but maybe not such invisible like was before).
The good news is a natural solution exists. Bitcoin can solve this issue natural way.
While decreasing block reward and moving from the first edge case to the second one - the system naturally cross the Area of Balance.
And healthy system should stay somewhere in such area. And that's exactly what Monero did. But they did it arbitrally, at 0.9% level.
Bitcoin is able to do it much better - because empirically.
There is a simple trigger if the system is leaving an Area of Balance and cross the line of Phase 2 with "free lunches". The network difficulty / global network hashrate chart.
Four years after some particular halving (in 2028, 2032 or later - no matter when in fact) - we will (definitely) see difficulty is not recovered during four long years.
This is a big red light. It means that halvings starts to be destructive to the network security.
Something what became destructive to the network - must be removed. Halving must be removed in such moment. Moment determined empirically - what is good thing. Satoshi Nakamoto wasn't able to properly predict when this moment may appear, but we are in better situation.
"Bitcoin to the moon" (and any other pro-21M hardcap shortsighted slogans) - must have a lower priority than network security/health.
I'm sure Satoshi would agree with it. Of course, someone may set up such environment, where holders (i.e. passive users) have got a free lunches
and security of network is based on active users' shoulders only. Someone could even insist that it is quite fair...
But please don't expect a lack of impact for the network security where not all, but only a part of users - participate in supporting network health.
Many people don't realise a simple fact: keeping destructive halvings in such situation above, just for maximising appreciation of already hoarded coins
- is counterproductive. Because the network security is decreasing.
We have a lot of time yet to educate people about it - for reaching common consensus for halvings removal with "ease".
We should probably use Milton Friedman's quote and highlight that balanced system with 0.45% / 0.225% / 0.1125% (?) annual inflation rate (and slowly decreasing)
- is still enormously better than any surrounding fiat system. But system still balanced and stable - and not in spiral of death...
“Bitcoin should have had a 0.1% or 1% monetary inflation tax to pay for security,” Peter said long time ago, further arguing bitcoin will die if it doesn’t change the limit.
I fully agree with Peter. The halvings should be removed in case it starts to be destructive to the network security (lack of hashrate recovery during long 4 years after given halving). Because that means bitcoin system has reached equilibrium / saturation on a globe scale level. The evolutionary path is the best path.
The worst path is: overcomplicated constructs, completely unclear for Average Joe. Additional merge-mining coins, whatever etc. - just to achieve the same final goal.
KISS = Keep It Simple. Halving removal is the most honest, simplest and most understandable way to make every bitcoin pasive user to participate in keeping Bitcoin network secure. It just force the rule, that someone pay proportionally to amount of bitcoins he/she hold, and all participants are sure that everybody participate (no Prisoner's Dilemma, what is crucial matter)
Yes, that means: hard fork. But as written above - Bitcoin will die without the solution.
Bitcoin may be also out of sudden in a deadly risk from quantum computers. In such circumstances everyone (or: almost, i.e. everyone who cares) - would immediately download a quantum resistant, freshly released bitcoin wallet, no doubt. And these two dangers are similar at least in one aspect: both will cause the spiral of death.
Widespread consensus would be the best scenario, but from the other side: a fork always shows retrospectively, who was right (BCH turmoil in 2017)
Regards
Jaroslaw
P.S some other resources yet:
"Friedman originally proposed a fixed monetary rule, called Friedman's k-percent rule, where the money supply would be automatically increased by a fixed percentage per year. Under this rule, there would be no leeway for the central reserve bank, as money supply increases could be determined "by a computer", and business could anticipate all money supply changes. With other monetarists he believed that the active manipulation of the money supply or its growth rate is more likely to destabilise than stabilise the economy.
Most monetarists oppose the gold standard. Friedman, for example, viewed a pure gold standard as impractical.[9] For example, whereas one of the benefits of the gold standard is that the intrinsic limitations to the growth of the money supply by the use of gold would prevent inflation, if the growth of population or increase in trade outpaces the money supply, there would be no way to counteract deflation and reduced liquidity (and any attendant recession) except for the mining of more gold"
no block reward => reduced liquidity (reduced number of transactions) => network security in spiral of death
https://en.wikipedia.org/wiki/Monetarism
https://en.wikipedia.org/wiki/Friedman%27s_k-percent_rule
https://twitter.com/hasufl/status/1511470668457652224
_______________________________________________
bitcoin-dev mailing list
bitcoin-dev at lists.linuxfoundation.org
https://lists.linuxfoundation.org/mailman/listinfo/bitcoin-dev

2023-06-07 23:11:30 UTC

- reply

📅 Original date posted:2022-07-26
📝 Original message:"large holders who perform zero transactions will still mine in order to preserve the value of the network"
let me slightly modify the sentence below:
"The Prisoner's Dilemma is a standard example of a game analyzed in game theory that shows why completely rational large holders might not cooperate, even if it appears that it is in their best interests to do so."
I'm pretty sure we will have a textbook case of Prisoner's Dilemma here.
Regards
Jaroslaw
W dniu 2022-07-26 10:20:38 użytkownik Erik Aronesty via bitcoin-dev <bitcoin-dev at lists.linuxfoundation.org> napisał:
even with zero block reward and minimal fees, large holders who perform zero transactions will still mine in order to preserve the value of the network
this is not "mining your own tx", it is unrelated
this is "mining at a small loss to preserve your stake"
not only don't we need issuance or fees, but also the censorship resistance is not meaningfully improved with issuance
On Mon, Jul 18, 2022 at 3:14 PM Erik Aronesty <erik at q32.com> wrote:
subsidy to directly tie miner revenue to the total value of Bitcoin
makes it not exactly how we want to incentivise a service that keeps
again, this is meaningless. if the fees aren't enough to keep bitcoin secure for large transactions, then large holders are incentivised to mine
that's it.
it's not complicated
-------------- next part --------------
An HTML attachment was scrubbed...
URL: <http://lists.linuxfoundation.org/pipermail/bitcoin-dev/attachments/20220726/b91c65b7/attachment.html>