Author: Eric Voskuil 2022-06-21 20:10:43
Published on: 2022-06-21T20:10:43+00:00
The Bitcoin community is discussing the question of how to pay for the Proof-of-Work (PoW) security of Bitcoin. Keagan McClelland argues that it doesn't make sense for the entire cost of security to be paid for on a per-tx basis since the security benefits all Bitcoin users, proportional to the value of BTC they hold. However, Erik Aronesty counters this argument by stating that people who transact are realizing the benefit of money, and those who never transact never realize any benefit. He adds that paying for security on a per-tx basis might not work due to lack of consistent demand. Manuel Costa suggests implementing a hard fork to indefinitely maintain some degree of block subsidy if block rewards become too low to maintain acceptable security. Keagan prefers the demurrage route as having something with finite supply as a means of measuring economic activity is unprecedented and deeply important. However, chain security - censorship resistance is entirely dependent upon tx fees. Keagan also believes that while inflation may be simpler to implement, it would be superior to keep the supply fixed and have people's utxo balances decay at least at the level of the UX if a hodl tax was necessary. He concludes by saying that none of these should be reasons not to improve Bitcoin's value and demand. Erik believes that before implementing a hard fork, the community should try increasing block demand with advanced transaction support such as covenant support and mweb, which might be more than enough to sustain Bitcoin on fees alone forever. On-chain mixing protocols, vaults, and higher utility can also contribute to sustaining Bitcoin on fees alone.
Updated on: 2023-06-15T21:22:05.938282+00:00