Author: Billy Tetrud 2022-07-07 00:46:15
Published on: 2022-07-07T00:46:15+00:00
The discussion on Bitcoin's security has been ongoing, with several opinions expressed. It is agreed that there is currently zero feedback in the Bitcoin system between what might be considered the optimum amount of security and what actually exists. While the link between block subsidy and Bitcoin's price does give somewhat of a feedback loop, it is not very direct, and even with this link, it's not very predictable.There is no agreement on how much security would constitute such an optimum, and generating consensus on this is the first step towards determining optimum security, probably in the next 10-15 years. One suggestion is to figure out what Bitcoin's bottlenecks are, and determine the minimum requirements needed to run a node based on how many public nodes one thinks they need and what percentage of machines are likely to run a node.A market mechanism to answer how much security is needed will be an important project. There will always be competitive pressures with respect to efficiency, and both being over-secured and under-secured would be economically inefficient for a cryptocurrency, thereby leaving room for a more optimally-secured competitor to gain ground.One option, if we were to decide we are over-secured in the short term, would be to soft-fork in a reduction in the current and near-future mining rewards, by somehow locking the coins in a contract that deprived the miner of the full reward, and then using that contract to pay the rewards out far in the future, should at some point the security budget be insufficient. It is suggested that we should target a certain amount of security and have programmatic adjustments to the block size to stay near enough to the parabolic maximum so that we pay miners enough to give us sufficient blockchain security, while attempting to minimize how much "extra" security we pay for. Such a thing is a form of devaluation that represents a tax on bitcoin and users of bitcoin.However, it is difficult to determine the market value of bitcoin at any given time, which makes it difficult to maintain a target over time. As the market value of bitcoin changes, that target could become quite inaccurate. This implies that we would need to do periodic adjustments to the target, either through periodic forks or through some other mechanism for changing the target. In conclusion, figuring out how much security is needed or developing a market mechanism to answer that question will be an important project and generate consensus on this long before the block subsidy becomes too small.
Updated on: 2023-06-15T21:19:26.240616+00:00