Author: Andrew Cann 2020-03-27 09:17:34
Published on: 2020-03-27T09:17:34+00:00
The possibility of bitcoin becoming unusable due to mining profits dropping low enough for a state actor with a warehouse full of ASICs to mount a 51% attack and mine empty blocks all day has been raised. There are also concerns over losing private keys, which would result in the vote of that UTXO containing bitcoins remaining forever fixed and unable to change. However, it is noted that the proportion of coins whose signaled inflation rate is fixed in time would tend towards zero or one depending on whether the long-term rate of deflation due to lost coins is less or greater than the rate of inflation. The security of a UTXO is better as it gets buried deeper, and once a sufficient level of security in ownership of the coin is achieved, there is no need to pay for more security. If the coin becomes worthless because someone can unwind transactions at will and prevent spending, then it is crucial to pay transaction fees. In cases where there are no miners at all, a high fee could be offered to get the transaction mined. The tragedy of the commons is discussed, with the example of aquaculture in a lake used to explain the idea that without some mechanism to force everyone to pay their fair share, people may opt out of paying, leading to an undesirable equilibrium in which no one will sign such a pact. The question of whether a thousand bitcoin-spenders, individually paying for their transactions but collectively paying for their security, will fall into the same dynamic is raised.
Updated on: 2023-06-14T00:08:33.306179+00:00