Published on: 2021-05-25T19:40:58+00:00
In a recent email exchange among Bitcoin community members, the security of Bitcoin was discussed. Estimates for the cost of an attack on Bitcoin ranged from $1.5 billion to $720 billion for government attacks. The security model of Bitcoin was described as dual and heterogeneous, with both a block subsidy and fee model. Fluctuation of fees was identified as a factor that could impact the effectiveness of an attack. The discussion also touched upon reducing Bitcoin's security to save costs, acknowledging the need for more accurate analysis to determine necessary security levels and attack budgets. Suggestions were made to incentivize good behavior in the mining industry, such as coding incentives for investigating miners' business practices.Concerns were raised about the environmental impact of Bitcoin mining, with proposals to address energy consumption and pollution. Making proof of work a proof of environmental kindness was suggested, but it was recognized that no single solution exists and agreement on acceptable solutions is necessary. Potential vulnerabilities of Bitcoin were examined, including covert compromise of mining pool operations, widespread compromise of networked mining systems, and the possibility of government interference in mining farms. Careful consideration of security measures was emphasized to protect against attacks.The relationship between security and inflation in Bitcoin was explored, with arguments that a fee market alone is not sufficient to sustain the system. The need for more energy usage and determining how much energy should be spent on mining were also discussed. The level of security required for transactions on the blockchain was deliberated, noting that while most transactions may not require high security, all transactions must have the same level of security if provided. The Lightning Network was proposed as a solution for securing majority transactions that do not require extensive security measures.Overall, the discussions highlighted the importance of determining the necessary level of security for Bitcoin and making informed decisions on trade-offs. More accurate analysis, careful consideration of alternative solutions, and addressing vulnerabilities were deemed crucial for the future of Bitcoin.Another discussion on the Bitcoin-dev mailing list focused on reducing the block reward and its impact on energy use. It was suggested that increasing popularity of Bitcoin raises fees and energy use, but if it becomes an issue, the block size could be raised to lower fees. However, there is little economic incentive to fine carbon emissions, and enforcing that pollution be paid for by those who cause it was emphasized. Various suggestions were made to prove carbon offsetting and implement an on-chain tax for environmental harm.The author argued that reducing the block reward of Bitcoin is not necessarily bad as it reduces the incentive to mine and lowers energy consumption. The focus should be on energy efficiency rather than energy use, aiming to get the most work possible with the least entropy-increase. Properly accounting for negative environmental effects of mining and charging fines to miners would naturally encourage the adoption of sustainable and renewable processes. The author also highlighted the importance of not rejecting Bitcoin based on environmental concerns, as it is an honest currency in accounting for its energy usage. The need to enforce that pollution be paid for by those who cause it was emphasized.An alternative to outright rejection of transactions that attempt to spend increased block rewards was suggested: treating them as no-ops. However, this alternative was deemed inefficient as it reduces available block space for operational transactions.The Bitcoin network has a self-balancing system that reduces energy consumption as adoption decreases due to public concerns about its environmental impact. In 2024, block rewards will decrease by 50%, further reducing miner incentives. To make Bitcoin greener, users could prioritize green miners who would receive more transaction fees, creating an economic incentive for environmentally-friendly mining. A proposal was made to gradually reduce the block reward by adding fewer coins to the UTXO set per block. This proposal has potential weaknesses, including centralization towards Chinese miners, the risk of network split without consensus, and the cost of reversing recent Bitcoin transactions. Despite these challenges, given the current political climate and public discussion on Bitcoin's energy use, it may be socially feasible to ask users and major exchanges to install a version of Bitcoin that implements this proposal.
Updated on: 2023-08-02T03:54:30.370790+00:00