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618 sats \ 21 replies \ @SpaceHodler 22 Nov 2023 \ on: Stranded sats bitcoin
I can envision the following scenario:
- People lose sats through stranding. Effectively the supply, over time, shrinks to, say, a fraction of 1 BTC.
- One day a stack is rediscovered, e.g. an archaeologist digs up a steel plate.
- The market is flooded with sats, the supply increases and people's sats lose value overnight.
They're not happy. The start a hard fork to remove that from circulation. Which is technically a new money, but one that preserves the relative wealth among them.
That's a beautiful illustration of how money is really a social consensus, whatever its technical characteristics. The unearthed btc in your example would be technically legitimate but not socially legitimate. Everyone in the world, aside from the archeologists, would have an extremely strong desire to keep the distribution of wealth as it was; and for good reason: it would be a Cantillon effect like no other in history.
I think this is a really helpful lens to think about how the existing system feels / will feel about btc. And if you know that those social processes are at work, what's the best thing that could happen? What's the worst thing that could happen? If you're a btc advocate, what could you do to promote one and resist the other?
This reminds me a bit of the economics thought experiment you proposed a few weeks ago, @Undisciplined.
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That is a very interesting scenario. I don't understand everything that goes into the stranded sats issue well enough to have a strong opinion about SpaceHodler's first point, but the second and third points are going to happen every so often.
There are a couple of non-Bitcoin analogues that come to mind.
- As certain materials become more expensive, we'll see people start mining landfills and that will occasionally have big price effects when they strike a motherload.
- The closer analogue is asteroid mining. Someone is going to wrangle an asteroid with more gold than will ever be discovered on Earth and the impact will be enormous.
I've thought about the asteroid scenario a bunch. Of course, it doesn't have a hard fork option. Gold will just lose most of its monetary value, but will become a widely used material. The similarity is in the way people's fortunes will be wrecked and how they'll attempt to protect them.
I wonder if the hard fork would happen swiftly enough to protect existing wealth or if the discoverer would anticipate that reaction and be able to head it off, somehow.
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I wonder if the hard fork would happen swiftly enough to protect existing wealth or if the discoverer would anticipate that reaction and be able to head it off, somehow.
It's fun to think about what it would mean exactly from a technical pov -- since the supply is limited, drawing from this ancient UTXO would be immediately apparent. But you can imagine scenarios where btc adoption had progressed to something like what Monero or Grin has, where everyone is using some privacy tech s.t. transactions are shielded to such an extent that it's not immediately evident what the source is.
I guess the devil's in the details.
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We have to remember that not everyone would be against this infusion. Whoever they're going to be spent with will be for it. Could this archeologist arrange enough side payments to thwart the hard-forkers? It is really interesting to think about.
My guess is that there will be more gradual processes that prevent us from being in that situation.
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Bitcoin could be updated preemptively to expire UTXOs that are e.g. more than 100 years old.
If you have generational wealth in UTXOs nearing that age, you'd have to move them before they expire.
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I expect in time the appetite for these sorts of assurances will increase -- probably the first one would be Satoshi's 1m stash. Right now I don't think you'd get much support for it.
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I've seen people talk about that. It makes sense, since it's basically just reconciling the de facto supply and the nominal supply.
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not keen on this idea, its prejudice against people with extreme low time preference ;)
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Ray Kurzweil predicts we'll become immortal by 2030.
It can be a pesky requirement indeed, having to pay a tx fee every goddamn century to retain your slice of infinity.
Because if you miss it, you'll have to lift a finger again.
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Sounds like something @petertodd would come up with lol. no offense, I love most your work.
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The dynamics are the most fun thing, and also the hardest: the thought experiments like with the archeologists reveal something, but of course it's only a thought experiment. So as things evolve incrementally, how do these ideas manifest?
In more realistic scenarios, I think you're right, the archeologists would have a faction of supporters. This comes up in some of the RBF game trees, where the attacker / victim provide increasingly large "bribes" to the miners hoping to get them to select their preferred version of reality. In the limit case a pissed off victim gives the whole stash as a mining fee, I suppose.
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Both forks would exist alongside each other - the conservative / purist one and the 'fair' one, and the market would choose which to give value to.
"Fair" meaning what people consider fair. Now, generally bitcoiners consider it fair that those who work hard and spend less should be wealthier than those who work less or spend more. So in extreme cases, the archeologist's Cantillon effect-driven wealth would be viewed as extremely unfair.
Now I may be going off on a tangent, but there are many other ideas of fairness. For example, socialists might prefer a coin that results in a more equal wealth distribution. E.g. a Bitcoin-like network that airdrops money into your wallet every month and expires it if you don't spend it, to prevent accumulation. And these ideas of equality are quite popular if you look at politics. This can easily be achieved with a CBDC, but can they materialize in the form of a decentralized network like Bitcoin? I can see a hurdle here, namely it would have to ensure one person can only have / control one wallet, which would require a system of centralized identity issuance.
Even if it's possible to overcome these seemingly technical obstacles (which may actually be more fundamental than technical), another question arises: who decides what money gets adopted and gets to dominate? Is it those most able to accumulate wealth after all? They surely would milk their SocialistCoin airdrops by selling them for BTC as soon as they land in their wallets, transferring value to what allows one to store value.
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Yet, fairness varies; socialists might favor a coin promoting wealth equality, like a Bitcoin network with monthly airdrops and expiry to prevent hoarding. Wealth accumulators might exploit such a system, converting their 'SocialistCoin' airdrops to Bitcoin, favoring a currency that maintains value.
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😇 This discussion is great! Funny thought, it can become like democracy all over again. The archaeologist who finds mega stash just needs to keep in the favour/vote of the 51% most easily influenced people/node runners.... They would probably come up with a plan to spread out the spending and in this way would have a government/pharro like function.
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Exactly. Once you start playing it out in your mind, you realize this is all about social interaction; and at scale, basically, it's politics.
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Long live the lucky digger!
I love thinking about Bitcoin history and the far future.
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This is one of those places where game theory struggles, but that probably is the Nash equilibrium.
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Good point.
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Well, if we're hard forking, just hard fork to divide that last bitcoin as much as needed. The only thing that's actually important here is the divisibility. So long as it is divisible, you will have enough for the entire world, and this will avoid an inflation scenario. If it's not divisible... I guess there will be an issue. What can you do?
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This would make a great story!
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