Author: Phuoc Do 2021-05-24 22:03:32
Published on: 2021-05-24T22:03:32+00:00
The relationship between security and inflation in a monetary system is discussed in an article on Bitflate.org. While energy is necessary for security, so too is inflation, which ensures there will be security. Bitcoin's block reward is constant and reduced every four years, but its price has increased exponentially compensating for the reduced inflation. The author argues that a fee market alone is not enough to sustain the system and that without inflation, the system will collapse. Cutting block rewards could reduce energy spend, but it would likely destroy the system, and instead, questions should be asked about how much energy should be spent on mining and how renewable energy can be used.In a post on bitcoin-dev by James Lu, reducing the block reward gradually is suggested as a way to reduce the incentive to mine and, therefore, reduce energy use. This is proposed as a soft fork that tightens the consensus layer, and while there are some possible weaknesses such as the potential for centralization towards Chinese miners and the risk of the network splitting if consensus is not built before flag day, given the current political headwinds around Bitcoin's energy use, it may be socially possible to ask individual users and major exchanges to install a version of Bitcoin with a reduced block reward. Other alternatives to outright rejecting transactions that attempt to spend increased block rewards are also suggested.
Updated on: 2023-06-14T22:09:04.291837+00:00