Published on: 2018-01-30T06:20:35+00:00
The conversation between ZmnSCPxj and Chaofan centers around the concept of fungibility in paper money and Bitcoin. They discuss how fungibility allows for the exchange of paper money with different denominations, and question whether the same principle applies to bitcoins generated from different blocks. They also ponder if bitcoins from the early blocks mined by Satoshi would have higher value if released. The idea of fungibility having a measurable value is suggested.Fungibility is explained as the principle that ensures indistinguishability in paper money, where a $10 bill is equivalent to ten $1 coins. This principle also applies to cryptocurrencies like bitcoin, thanks to mechanisms such as sidechains, SPV proof-of-work, and drivechain proof-of-voting. However, it is emphasized that proposals need to differentiate themselves from previous ones to avoid confusion.The possibility of eliminating human perception differences in money is discussed. The suggestion is made that wallets and exchanges should only display the total amount of bitcoin, rather than separating them into different types. It is explained that one valid address is automatically valid on both chains, allowing money to be sent through either chain as long as the private key is available. This means there would be no difference in the number of merchants, and exchange costs would be trivial.The conflation of mining difficulty with profitability is highlighted as erroneous. It is argued that profitability is controlled by competition, not difficulty. While the idea of equilibrium is mentioned, it is stated that even a small change in the number of merchants or human perception of money can lead to the elimination of one currency in favor of the other. The exchange cost between two currencies is seen as a disadvantage, making one currency inherently better than two.The discussion on the bitcoin-dev mailing list revolves around the distribution of miners between two similar chains. The argument that miners will be equally distributed based on mining difficulty is criticized. It is explained that mining difficulty only controls block period, not miner return on capital. Profitability is determined by competition, and miners seek the same level of profitability regardless of difficulty. The assumption that both chains have the same initial or final value is deemed unrealistic, as even the smallest change in number of merchants or human perception can lead to one chain being slightly better and gaining dominance.To achieve equilibrium, it is suggested that two chains must have comparable chain generation rates, length, and difficulty. If these conditions are not met, miners will be attracted more easily to the chain that is easier to mine, resulting in a higher chain generation rate. Eventually, equilibrium will be reached.The value of block space in Bitcoin is discussed, with emphasis on miners investing capital based on anticipation of future returns. The relationship between mining power and cryptocurrency value is debated. While one member asserts that the chain with the most mining power will have more value, another member disagrees and suggests that tokens with higher value attract more mining hash rate. This highlights the complex interplay between mining power and cryptocurrency value, which depends on various factors.The conversation also touches upon the question of how to handle mining on each chain. It is mentioned that the chain with more mining power will have greater value. Additionally, the speed and value of a chain will depend on its length, with one chain likely to be longer and faster. The proposal being discussed appears to involve a sidechain with the same protocol.
Updated on: 2023-08-01T22:31:07.089707+00:00