Author: Stefan Richter 2022-07-11 06:15:40
Published on: 2022-07-11T06:15:40+00:00
In a discussion on the bitcoin-dev mailing list, Anthony Towns and AJ shared their thoughts on the assumption that the rate of coin loss is proportional to the total supply at that moment in time. They argue that this assumption may not necessarily be true since losses may be due to a common cause, or primarily lost in "black swan" events that vary chaotically, leading to "inflationary" periods in between events, and comparatively strong deflationary shocks when these events occur. Alternatively, losses could be at a predictable rate that's entirely different from the assumption made. One plausible alternative rate is if funds are lost due to people not being careful about losing small amounts when the value of coins was lower, but they become more careful as the value increases. AJ argues that x, the constant fraction of bitcoins lost each year, should be minimized over time, or even decreased faster than 1/(N(t)*P), where N(t) is the total supply and P is the price of Bitcoin in real terms, to maintain a non-inflationary currency with a constant adoption rate and price. Overall, they suggest that the assumption of a constant loss rate seems unreasonable, and we have observed that the bulk of coins that are supposed to be lost haven't been moved since at least 2010, indicating that people get better at keeping their coins with increasing value, distribution and technology/best practices.
Updated on: 2023-06-15T22:35:47.956461+00:00