Published on: 2022-08-20T15:30:26+00:00
The context discusses various discussions and debates related to the functioning and security of the Bitcoin network. One aspect discussed is the concept of "free lunches" in the network, where some users benefit without contributing, while others bear the costs. It is argued that this is an unhealthy state for the financial system and may not be sustainable in the long term.One suggestion to address this issue is to remove halvings, which are events that reduce the block reward for miners, if they become destructive to the network's security. It is also mentioned that a balanced system with a low annual inflation rate is preferable to any fiat system. While widespread consensus would be ideal, it is acknowledged that a hard fork may be necessary to implement necessary changes.The feasibility of large Bitcoin holders running ASICs to secure their holdings is also discussed. The assumption is made that fees alone may not compensate for low block rewards, and therefore, large holders may mine at a loss to preserve the value of their holdings. However, it is acknowledged that this approach may not work in practice due to trust issues and the potential for betrayal.The concept of the Prisoner's Dilemma is mentioned in relation to cooperation between Bitcoin users. It is highlighted that even though cooperation may be in the best interest of both parties, mistrust and self-interest can lead to suboptimal outcomes.The importance of transaction fees in providing censorship resistance and incentivizing miners to keep the network secure is emphasized. The discussion explores different approaches, such as tying miner revenue to the total value of Bitcoin or relying solely on transaction fees.There are debates about the business model of miners who intend to censor transactions when there is no block reward. It is argued that transaction fees provide censorship resistance, and miners may prioritize high fee transactions to maximize their earnings.The role of the block reward in the functioning of the Bitcoin network is highlighted. The question is raised about whether a perpetual block subsidy should be tied to the total value of Bitcoin or if other methods should be considered to incentivize miners.The assumption of a constant rate for losses in Bitcoin is challenged, and it is argued that losses can occur at a predictable rate. The potential impact of lost coins on the overall value of Bitcoin is discussed.There are also discussions about the subjective nature of defining Bitcoin and the role of leading bodies versus individual autonomy. The importance of the capped supply and predictable issuance curve is mentioned, and tinkering with the protocol is seen as potentially inviting further subversion.The discussion revolves around the predictability of losses in tail emission. While Peter assumes that there is a rate, it is possible for losses to be at a different predictable rate. However, if there exists any fixed central tendency for the rate, tail emission will eventually become non-inflationary. There are two other factors to consider: firstly, if people improve custody faster than 1/(N(t)*P), tail emission can still be inflationary, although this seems unlikely. Secondly, the rate is somewhat stochastic, with "black swan events" like popular wallet losing keys in coding error being possible but not relevant to tail-emission being non-inflationary. However, even such events can be factored into a fixed central tendency over a long enough time period.In the discussion on whether or not to extend block rewards after the current deadline, it is noted that this is only relevant if the community agrees that it is necessary to maintain network security. It is worth noting that a mild inflation can sometimes be compensated by coin loss, which is like a bonus. The assumption of a constant coin loss rate seems unreasonable as people improve their key storage habits over time, leading to a decrease in the rate of coin loss. Additionally, there may be common causes for coin losses that result in heavily correlated losses rather than independent ones.The conversation further explores the potential implications of tail emission on the ability of individuals to access their coins. Todd clarifies that his proposal does not involve re-assigning ownership of coins and therefore does not take away anyone's ability to access their coins. The concern raised by naman naman about the ability to move coins after a long period of inactivity is addressed, with Todd stating that his article on tail emission is focused on maintaining blockchain security without causing inflation.The latest blog post by Peter Todd titled "Surprisingly, Tail Emission Is Not Inflationary" explores the concept of tail emission and its impact on the supply of Bitcoin. Todd argues that tail emission, which is a fixed reward per block that continues indefinitely, can result in a stable monetary supply rather than a monetarily inflationary one. He explains that lost coins contribute to this stability, as they are constantly being lost due to various factors such as deaths, forgotten passphrases, and accidents.The article also discusses the feasibility of implementing tail emission in Bitcoin. While other currencies like Monero have successfully implemented it, adding tail emission to Bitcoin would require convincing a substantial fraction of the Bitcoin community to support the idea.
Updated on: 2023-08-02T06:56:36.748113+00:00