Author: Billy Tetrud 2022-06-30 15:25:47
Published on: 2022-06-30T15:25:47+00:00
The discussion on the bitcoin-dev mailing list revolves around the economic utility of bitcoin transactions and the payment for bitcoin's security. The value gained from using bitcoin is based on its properties compared to other currencies or payment systems, such as quick finalization, reduced 3rd party middleman fees, and no counterparty risk. It is argued that holders gain significant value from bitcoin, regardless of who received more economic utility from their chosen transactions. The discussion also touches on the topic of pool operators being free to request larger fees from older utxos, but it is not incentivized due to financial losses. Keagan's point is that only transactors pay for bitcoin's security, although all actors gain value from using it. It would be ideal if the payment for bitcoin's security was spread proportionally to those who benefit from using it. However, it is unlikely that individual miners will altruistically lose money to achieve this goal. The idea of decaying utxo value is considered, although it would not solve the economic distortion caused by monetary inflation. The economic distortion of inflation causes a negative effect that should be considered. Demurrage and inflation are found to have identical economic properties, being a tax on savings. Although demurrage could be implemented in a soft-fork, it is not practical in reality, and it makes protocols like Lightning much more complex.
Updated on: 2023-06-15T21:23:41.248890+00:00