Author: Eric Voskuil 2022-07-08 00:28:36
Published on: 2022-07-08T00:28:36+00:00
The relationship between block size and fees is not linear, as restricted environments result in higher fee rewards. A reduction in confirmation rate reduces reward at some point, while a rate of zero implies infinite reward. It cannot be supported that lower confirmation rates produce much higher fees or better security, and what appears to be a bidding war is merely market pricing. Value is subjective, and you cannot prove the price of anything nor can any papers. If everyone pays 1 sat, miners are profitable or people are not getting confirmed. The assumption of 1 sat txs filling blocks is based on a disproportionately high subsidy. Propping up hash rate with subsidy will not be inflationary, but it will prevent Bitcoin from achieving meaningful censorship resistance. Without fee-based tx confirmation and/or with a disproportionate subsidy going to the censor, a censor can operate profitably and indefinitely. Simply fork off an inflation coin and test your theory.Smaller blocks produce better security for the network both in validation and fees. Without a bidding war for space, everyone can post 1 SAT/byte. With a bidding war for space, larger transactions will pay much higher rates. Increasing demand is the only thing that increases double spend security and censorship resistance assuming fee-based reward. With rising demand, there is rising overall hash rate despite block reward and profit remaining constant. Given that the block subsidy (inflation) is paid equally to censoring and non-censoring miners, it offers no security against censorship whatsoever. Banks and state monies offer reasonable double spend security. It is economic forces, not technology, that provide security. The decision to phase out subsidy once a sufficient number of units had been issued transitions Bitcoin from a censorable to a censorship-resistant money. If one does not believe there is sufficient demand for such a money, there is no way to reconcile that belief with a model of censorship resistance. There is no agreement on how much security would constitute such an optimum. The present amount of security is about 1.7% of the total coin supply/year, and Bitcoin seems to be working fine. There is zero reason to stress about finding an optimal amount. An amount low enough to be easily affordable but non-zero is fine. These are all amounts that are likely to be dwarfed by economic shifts.
Updated on: 2023-06-15T21:20:16.063724+00:00