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20 sats \ 2 replies \ @jk_14 26 Sep 2023 \ parent \ on: Tail Emissions Are A Terrible Idea bitcoin
If bitcoin is dying due to lack of free market between active users and passive free-riders - what is the more important thing than to rescue Bitcoin from death?
Free market is more important than finite supply,
and yes - this is the only way to reach equilibrium between active and passive users - by step-by-step iteration to the certain level and stay there forever (just to allow Bitcoin to stay here forever)
I'm glad finally someone understood the idea. Now you need to some time to admit, unpredictable variable is free market at its finest :)
It makes sense. Something akin to what the central banks do by setting interest rates, but algorithmic, leading to a 'natural' (rather than manipulated) level of inflation. But different, because it's directly tied to security.
I haven't thought whether it would be an issue if it works in one direction only (halvings, but no doublings), but it might.
When I was learning about Bitcoin, I heard "It costs you nothing to store your bitcoin (as opposed to, say, gold). You get security for free." and thought it sounded wonderful, but too good to be true. There is no free lunch and all that...
I understand a lack of inflation is aligned with Austrian economics, but the Austrians didn't know a monetary system whose security was tied to inflation. So it's a new concept to wrap one's head around.
But then, I wonder (and again, I haven't thought about it much, it's just some loose thoughts), if Bitcoin's security relies on there being no single entity large enough to thwart it (likely a superpower nation state, like China or the US) and "large" is relative to the size of the population, and if Bitcoin successfully decentralizes power making nation states and corporations weaker (which it may or may not), then that alone may make a 51% attack increasingly harder, mitigating the effect of the falling block rewards.
It's hard to predict what will happen - we're trying to make sure a system whose behaviour is modelled by exponential functions will work well over timeframes that exceed our lifespan.
It's not hard to imagine that even Satoshi may not have gotten it 100% right.
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"I haven't thought whether it would be an issue if it works in one direction only (halvings, but no doublings), but it might."
Yes, I'm not brave enough to propose "doublings" yet... ;)
frankly speaking - I'm unconfortable enough with undermining Holy Graal 21M
I wouldn't do that without my sureness that something must be done sooner or later with this long-term embedded problem.
Yes, there is no such thing as a free lunch - I'm a fan of Milton Friedman.
"It's not hard to imagine that even Satoshi may not have gotten it 100% right."
Very true. Satoshi forgot to implement free market between active and passive users, unfortunately.
When you realise that he started the system from one edge case - i.e. inflation starting from infinite in first block in fact, and stakeholders were able to survive this "early" phase with enormous annual inflation only because of "Numbers go up" (i.e. due to system expansion) - and system is simply going by design to the second edge case, i.e. with zero annual inflation.
I don't know if we could find any example of staying in the edge case - as a healthy state for any system. And we are trying to grass-root building of alternative financial system - maybe the biggest challenge I met in my life...
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