Author: Billy Tetrud 2022-08-20 15:30:26
Published on: 2022-08-20T15:30:26+00:00
The issue of Bitcoin's block subsidy algorithm being a disaster and overly rewarding early adopters has been discussed in detail. While tail emission is not a permanent solution, a constant inflation rate could be a reasonable natural way to scale security as needed. The current system can be gamed by miners moving their own coins in 100% fees transactions to produce more coins. One potential modification to the system that attempts to make it more difficult to game directly involves calculating an average sum of fees per block over a window and releasing 10% of that in coinbase rewards. However, this could lead to runaway inflation. Despite concerns about low block subsidy putting both security and adoption at risk, total collected fees will likely scale up as Bitcoin grows, probably quadratically. It is possible to help the system without aggressive intervention, either through smart tweaks or by supporting it using other systems.The issue with long-term security and adoption consequences is deeply built into Bitcoin consensus rules and is critical. Additionally, the 21M cap, halving, and generally, Bitcoin consensus, are not subject to change. The existing incentive for miners to earn money for including transactions is enough to motivate human nature, and transaction initiators have an incentive to mine and run full nodes for personal interest. Mining with waste electricity reduces losses and is another incentive to motivate human nature. While prisoners in the Prisoner's Dilemma cannot communicate, large Bitcoin holders are able to communicate with each other, and miners can join and leave the network freely over time. Finally, Bitcoin holders can be enfranchised into any new system, so there is no need to bike shed the original design which is a Schelling Point.
Updated on: 2023-06-15T22:32:00.674787+00:00