Author: Alex Lee 2022-06-28 16:23:40
Published on: 2022-06-28T16:23:40+00:00
In a discussion thread on the bitcoin-dev mailing list, several users shared their views on the distribution of the cost of Bitcoin's Proof-of-Work (PoW) security. Keagan McClelland suggested that it would make sense to have a balance of fees for holders and transactors. He preferred demurrage, stating that having something with finite supply as a measure of economic activity is unprecedented and important. Peter Todd responded by saying that demurrage makes protocols like Lightning more complex and isn't compatible with existing implementations. He noted that demurrage and inflation have identical economic properties as they both tax savings, and the only difference is in how that tax is implemented. Billy Tetrud voiced his opinion that storing value happens while holding Bitcoin, not spending it. To illustrate his point, he gave two scenarios: one person holds onto 10 bitcoins for ten years and then spends those 10 bitcoins in two transactions, while another person spends four bitcoins to buy something, sells it for six bitcoins, buys something else for those six bitcoins, and never acquires any Bitcoin for ten years. Both people spent ten bitcoins over two transactions, but only one of them utilized Bitcoin's utility as a store of value. Eric argued that those who never transact don't realize any benefit from Bitcoin. Billy countered this by stating that comparing those who transact often and rarely hold to those who hold a lot but rarely transact is more helpful. He also cautioned against confusing velocity metrics with utility, noting that there are legitimate uses for burning Bitcoin. Billy did acknowledge the technical and economic benefits of having a balance of fees but expressed concern about convincing the Bitcoin community that inflation is okay, which could have unintended negative consequences.
Updated on: 2023-06-15T21:25:11.452145+00:00