Author: Corey Haddad 2022-07-06 04:28:50
Published on: 2022-07-06T04:28:50+00:00
Bitcoin's finite supply is a significant factor for investors in the cryptocurrency. However, a limited supply alone is not enough to give something value; it must also be useful. In Bitcoin's case, various forms of cryptographic security must work together to make it useful. If the only way to pay for Bitcoin's security was through an inflation scheme that violated the 21 million cap, breaking the limit would likely make sense economically. Efficiency is also important in a crypto currency. Being over-secured or under-secured would be economically inefficient, leaving room for a more optimally-secured competitor to gain ground. Currently, there is no feedback in the Bitcoin system between the optimum amount of security and what exists. Figuring out the optimum amount of security is an important project, as is finding a market mechanism to answer that question.Another option could be to soft-fork in a reduction of current and near-future mining rewards by locking coins in a contract that deprives miners of the full reward. This contract could be used to pay out rewards far in the future if the security budget was determined to be insufficient. Anthony Towns presented a similar concept in greater detail at a Scaling Bitcoin conference some years ago. While this solution would only work for a finite amount of time, it could give additional decades before the accumulated security budget was exhausted.
Updated on: 2023-06-15T21:22:18.326947+00:00