Published on: 2020-03-28T02:12:37+00:00
The email thread discusses several key topics related to the Bitcoin protocol and its long-term sustainability. One topic is the concern over a phenomenon in capitalism where individual self-interest can lead to undesirable outcomes for everyone involved. This is illustrated using the example of fish farms in a lake, where each farm produces waste that lowers productivity. The discussion then moves to whether a similar dynamic would occur in Bitcoin with the block weight limit and transaction fees.Another topic of discussion is the potential security risks to the Bitcoin network. There are concerns about the possibility of a 51% attack by a state actor with a warehouse full of ASICs mining empty blocks all day. Additionally, losing private keys is highlighted as a risk, as it would result in the inability to change the vote of the UTXO containing the bitcoins. The need for transaction fees to ensure security is emphasized, and the tragedy of the commons concept is explained using the example of aquaculture in a lake.The idea of increasing the Bitcoin supply beyond 21 million is considered fundamentally broken, as it would change the meaning of Bitcoin and create a contradiction in its use. The role of transaction fees as an implicit "field" for voting on the necessary security is discussed. It is noted that transaction fees are only paid when bitcoins are moved, and there is no ongoing cost for holding bitcoins. The concept of voting on security through dilution is introduced, with votes weighted by the value of the UTXO. The importance of transaction fees for maintaining security is emphasized.The proposal for allowing a non-zero block reward in Bitcoin is debated. The argument against this proposal is that it would break the fundamental meaning of Bitcoin by exceeding the 21 million limit. However, the idea of a voting system for determining the cost of security is explored, where bitcoin holders can vote on the inflation rate. The author questions if transaction fees can ever drop dangerously low and suggests alternative ideas for ensuring network security.The long-term plan for ensuring the security of the Bitcoin network as the block reward drops is discussed. The current mechanism of transaction fees and their role in voting on security is highlighted as the best-known solution. The idea of an adjustable block reward, where bitcoin holders can vote on the appropriate reward, is proposed but criticized as fundamentally broken. The potential increase in the value per byte stored in the blockchain over time is mentioned, along with the possibility of holding companies with specialized scripts to handle transactions for multiple customers.There is a discussion about the possibility of building a difficulty adjustment trigger into Bitcoin software to address potential delays in retargeting. The proposal suggests miners signaling their recognition if the expected 2016 blocks have not been mined after twice the expected wait time. This would result in an expedited difficulty adjustment for the rest of the blocks and the following difficulty period. The idea is raised for consideration as a BIP, and other emails in the thread discuss mining as a lottery and potential solutions for handling a drop in mining power.The concern over miners optimizing their mining profit by limiting the hash rate during retargeting is brought up. Holding a lottery for mining is proposed as a more profitable solution for the ecosystem. The options of doing nothing or hard forking a difficulty reduction are discussed to address block solving slowdown. The decision to do nothing is deemed suitable if bitcoins retain some value compared to the previous retarget period and most mining equipment is operational. However, a hard fork to reduce difficulty may be necessary if there is a significant drop in bitcoin price or a large fraction of mining equipment becomes unusable.The email thread also addresses a question regarding how to handle a potential drop in mining power that could delay retargeting. Two practical solutions are suggested: doing nothing or implementing a hard fork to reduce difficulty. If most mining equipment is still operational and bitcoins retain some value, doing nothing is considered the best choice. However, if the bitcoin price plummets or a large fraction of mining equipment becomes unusable, a hard fork may be necessary to maintain a sustainable difficulty level.The discussion revolves around a scenario where the mining power drops off at a rate that could potentially delay retargeting. The author seeks ideas on how to avoid such a delay and expresses confidence in the Bitcoin community's ability to address the situation. Input from others is sought on potential solutions to handle this problem and ensure the smooth functioning of the network.
Updated on: 2023-08-02T01:56:23.687830+00:00