Author: jk_14 at op.pl 2022-08-15 21:46:52
Published on: 2022-08-15T21:46:52+00:00
In a recent blog post, Peter Todd discusses the issue of tail emission and its potential impact on the Bitcoin network. He highlights that there are two edge cases when it comes to cryptocurrency: starting out with high inflation rates or switching off the block reward in a mature phase. In the former case, active users get free lunches while passive users pay for it through inflation tax, while in the latter, passive users receive free lunches, and active users have to pay through transactional tax. Todd argues that people pay in the first phase because they hope for future price appreciation, but there is no real incentive for them to pay in the second phase.Todd believes that the situation with free lunches is an unhealthy state for the financial system, and it may last only for a short period. To solve this problem, he suggests removing halvings in case they become destructive to the network security, as that would mean the Bitcoin system has reached equilibrium. Todd also argues that a balanced system with a low annual inflation rate is still much better than any fiat system. While widespread consensus would be ideal, Todd acknowledges that a hard fork may be necessary, and the evolutionary path is the best way forward. He also notes that quantum computers may pose a deadly risk to Bitcoin and a fork may be necessary in such circumstances as well. Todd concludes that keeping destructive halvings above just for maximizing coin appreciation is counterproductive because network security decreases.
Updated on: 2023-05-22T20:39:31.242289+00:00