10 sats \ 7 replies \ @jk_14 15 Dec 2022 \ on: Long-term Bitcoin security (avoiding the death spiral) bitcoin
Because you beg - I may improve your understanding of the game theory and point you to resources that will prove... well... you will see :)
"Milton Friedman originally proposed a fixed monetary rule, called Friedman's k-percent rule, where the money supply would be automatically increased by a fixed percentage per year. Friedman, for example, viewed a pure gold standard as impractical. (...) if the growth of population or increase in trade outpaces the money supply, there would be no way to counteract deflation and reduced liquidity (and any attendant recession) except for the mining of more gold" ( https://en.wikipedia.org/wiki/Monetarism )
halving means: mining of less gold = strongly reduced liquidity (strongly reduced number of transactions)
reduced mining + reduced transactions = network security in spiral of death
*** Q.E.D. *** (sorry)
P.S. for more check comment and links inside:
#107021
lmao yes yes i've seen you propose this on other posts. i'm certainly not saying i completely disagree, as i'm simply not knowledgeable enough to take a side on the issue. but this is a very uncommon take in the space, pretty much everyone with a large platform evangelizes the hard supply cap. why do you think this is? and if i'm missing someone who doesn't, please point me to them
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But Satoshi was normal guy without infallibility atribute. So there is some chance he didn't predict EVERYTHING, perfectly, in every detail, and years ahead.
Simple, obvious economic rule tells this: the better given money is, the more is such money hoarded by people. That's vicious circle for Bitcoin security long term - and cult of Satoshi's infallibility prevent to name it properly.
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I'm not sure that this is convincing to me. Of course Satoshi wasn't infallible, otherwise he/she/they would have designed the perfect product and no BIPs would ever be needed. But Satoshi clearly got enough right we are seeing the emergence of a completely unique asset with brilliant properties that are transforming how people on a mass scale are looking at the concept of money.
And like I said, many people believe that Bitcoin's hard supply cap is instrumental to its utility as a sounds money. Can you strongman why this is for me? Why are so many brilliant economists and technologists pointing to this as one of the greatest strengths of Bitcoin, and not instead advertising the idea of tail emission? As soon as tail emission is introduced, no longer can Bitcoin be said to be the only absolutely scarce asset. Why would node runners ever agree to a change that would potentially devalue their holdings? And even if it did get through, how do we decide what is the right amount of tail emission? Who gets to decide what the tail emission is? Why wouldn't people will argue again, "uh oh, Bitcoin reward is getting too scarce again, bump up the tail emission" ad infinitum until BTC is another fiat currency?
The hard cap is what makes people who hold it have incredibly long time preference. People will only hoard as much of the strong money money as they can afford to, if the hoarding gets in the way of meeting their basic needs, they will trade it. So to me the scarceness is a mechanism that makes people think long and hard on what to trade their hard earned energy for, rather than piss it away like the fiat system encourages us to do. I'm just not seeing the argument for tail emission.
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I guess maybe the arguments that other people are making on this post as to why network security is not at risk are convincing me a little more than your arguments about tail emission. :P
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other people are making on this post as to why network security is not at risk are convincing me a little more than your arguments
but all that above is strictly about the network security!
i.e. how to avoid spiral of death in network security (and tail emission is only one of possible counter-measures)
how do we decide what is the right amount of tail emission
The moment we will see the first "destructive halving" - i.e. network difficulty was not able to recover during long four years after given halving - is right moment to switch-off halvings completely, and that's best possible method to set level of annual inflation rate. Best - because empirically done, by saturation of Bitcoin system at global scale.
Things destructive to the Bitcoin should be eliminated (no matter from where they are). So destructive halvings as well. I predict we will see it probably in 10 years, just around 0.1% annual inflation rate, reached "naturally". ( #107033 )
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switching off halvings doesn't seem to be an unreasonable method if it turns out that tail emission is an absolute must. after all this discussion, my prediction remains that it won't be. but whether it is or isn't, i look forward to an sharing an inevitable orange future with my you friend
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my point is: let's be mentally ready if it turns out that tail emission is an absolute must
that should be enough to mitigate this risk
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