Author: Eric Voskuil 2022-07-07 16:24:26
Published on: 2022-07-07T16:24:26+00:00
Peter Todd, a Bitcoin developer, responded to John Carvalho's comment on Proof of Work (PoW) and the difficulty adjustment function. Todd argued that the difficulty adjustment function does not solve every issue related to PoW. He noted that in case of a chain split or 51% attack, the difficulty adjustment would not work. Todd went on to discuss the falling hash rate due to a perpetual 51% attack, which leads to a fall in difficulty. At minimum difficulty, everyone can CPU mine again. However, as the difficulty falls, so does the cost of countering the censor. This means that even at any level of difficulty, there is an inherent economic incentive to counter the censor. Todd also highlighted that the block subsidy paid equally to censoring and non-censoring miners offers no security against censorship whatsoever. Instead, trading fee-based block reward for inflation-based is simply trading censorship resistance for the presumption of double-spend security. Todd believed that banks and state monies offer reasonable double spend security, and it is not worth making such a trade. In response to the discussion, Todd emphasized that it is economic forces, not technology, that provide security. He further added that active governance would be an exploitable mechanism, and the status quo of the block reward going away entirely is obviously a risky state change too. Finally, Todd argued that finding an "optimal" amount of security is unnecessary and that an amount low enough to be easily affordable but non-zero is fine. For instance, he suggested that 1% or 0.5% yearly inflation would be fine, given that these amounts are likely to be dwarfed by economic shifts.
Updated on: 2023-06-15T21:26:57.218795+00:00