Author: vjudeu at gazeta.pl 2022-07-10 07:08:49
Published on: 2022-07-10T07:08:49+00:00
The article "Surprisingly, Tail Emission Is Not Inflationary" by Peter Todd explains that a fixed block reward does not lead to an abundant supply, and due to the inevitability of lost coins, a fixed reward converges to a stable monetary supply that is neither inflationary nor deflationary, with the total supply proportional to the rate of tail emission and probability of coin loss. The author models the monetary supply as a continuous function and shows that in the long run, the initial supply doesn't matter because almost all coins will eventually be lost, and thus, the coin supply will converge towards a point where coins are created just as fast as they are lost. Monero has chosen to implement tail emission: a fixed reward per block that continues indefinitely. Due to tail emission, Monero's apparent monetary inflation rate was 0.9%. The author suggests that if an existing coin decides to implement tail emission as a means to fund security, choosing an appropriate emission rate is simple: decide on the maximum amount of inflation you are willing to have in the worst case and set the tail emission accordingly. Adding tail emission to Bitcoin would be a hard fork - an incompatible rule change that existing Bitcoin nodes would reject as invalid. However, it is possible to create any backward-compatible way of storing amounts in Bitcoin since there are zero satoshis. If Bitcoin ever implements things like hiding amounts, then using zero would be a good way to maintain backward compatibility. Ultimately, the only way tail emission could ever be added to Bitcoin is by convincing the same community that it is a good idea.
Updated on: 2023-06-15T22:35:29.056842+00:00