Author: Manuel Costa 2022-07-14 16:27:55
Published on: 2022-07-14T16:27:55+00:00
There is a proposal to burn all fees and keep a block reward that will smooth out while keeping the ~21M coins limit. The benefit of this approach is that revenues are equally distributed over time to all participants, and there will be an increased velocity of money which will reduce the immediate supply of bitcoin, thereby cooling down the economy. However, there are concerns that only rich people will be able to mine and participate in the consensus process. This could lead to a monopoly by wealthy holders who can create a cartel, and without market dynamics, game theory will stop working, causing the network value to drop.To avoid the "tail supply attack," a suggestion was made to send 0.01 BTC per block to timelocked outputs. This would mean less than 0.2% of the current 6.25 BTC, but the percentage would grow as the basic block reward shrinks. Mandatory 0.01 BTC would be endlessly moved until it wraps every 210,000 blocks, creating an endless circulation loop. This means you can lock 2,100 BTC in the loop and avoid the tail supply attack. In case the attackers win, we can counter-attack by burning those coins or locking them in an endless circulation loop.Another proposal was to add a rule that fees have to be sent to anyone can spend output with a timelock. However, this approach may not work as most of those outputs would be dust, and the miner would need to waste an absurd amount of block space just to grab them. There could be a smarter way to do it. The emission curve lasts over 100 years because Bitcoin's success state requires it to be entrenched globally. However, proper distribution is crucial, and if the emission curve emits 99% in the first year and 1% in the next 100 years, the emission "lasts" over 100 years, but it's a terrible form of distribution. Monero appears much better since its tail emission yields an infinite expected time of emission, but if we avoid infinities by looking at just the soft total emission, which is all that is emitted before a 1% yearly inflation, then Monero emits over 40% in its first year and halving the reward much faster. Finally, there's only one coin whose expected (soft) emission time is larger than Bitcoin's, and it's about an order of magnitude larger, at 50 years.
Updated on: 2023-06-15T22:51:25.493625+00:00