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1 sat \ 3 replies \ @cryptocoin 30 Oct 2022 \ on: One Solution to Bitcoin's Security Budget: Complementary Goods & Services bitcoin
This is where you are misunderstanding the bitcoin network's security.
It doesn't cost $7B to keep the bitcoin network secure (or even the $3.5B you suggest as the lower level).
The reason the bitcoin mining network is at the current level (~270 EH/s) is the result of exchange rate + block subsidy (currently 6.25 per block), which produces the $7B revenue to miners figure you mentioned. Double the price, that doubles the revenue, and will maybe nearly double the hashrate. Would that make the bitcoin network twice as secure as it is today?
Does a bank vault that has steel + cement walls made two feet thick cause it to be twice as secure as another bank vault with its walls just one foot thick? Probably not, if one foot thick is already secure, the added second foot in thickness does nothing further.
Or, let's look back the other direction. When bitcoin was down to 85 EH/s just sixteen months ago after China forced miners there to shut down, was the bitcoin network considered less secure than it is today? No, it was not.
So what is the hashrate needed to keep the bitcoin mining network secure? That will vary over time, as mining rig performance levels and efficiency improve over time, but we've reached a level that is maybe already an order of magnitude (or more) higher than what would actually have been needed for the bitcoin network to be at a level where it is prohibitively expensive to attack (e.g., for the purposes of successfully being able to carry out a double spend).
I can't calculate that but I would feel confident that if current hashrate were to decrease by half, corresponding with each of the halvings, (which could be expected if there there was no change to the BTC/USD exchange rate), that still the bitcoin network would be considered "secure enough" for the next ten years ... all else being equal. (That "all else being equal" part is crux though). We know looking back however, that hashrate rises much faster than the exchange rate (due to improvements in ASIC device efficiency), so there's even less chance of such a decrease in hashrate occurring.
I can't calculate that but I would feel confident
That's why I can't take my calc one step further and use the actual hash rate. I have to use a proxy for value, which is imperfect, but helpful for the analysis above.
I think my conclusion and calls-to-action stand, no?
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If the fees are not sufficient (and the subsidy drops from halvings such that miners become much more reliant on fees), the max block space can be reduced with a soft fork.
Miners would be onboard with that, so reaching 51% of hashrate willing to implement this would not be surprising if it were to happen. I don't expect it to happen though. At least not with the current trajectory of bitcoin adoption (rapid adoption on second layer, which results in some level of increased adoption on first layer as well, e.g. for channel open/close transactions for Lightning).
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the max block space can be reduced with a soft fork
That would drive up L1 fees from scarcity, not from adding more value. That's the equivalent of raising prices of a good, without providing more value.
My entire post is to suggest that finding a way to add more value, to compliment what a user gets from the "fees", is economically more sustainable than any other approach.
If a proposal ever landed to reduce block size, I imagine there would be an entire faction of people beating the drum of the message behind my post. The community would be divided, I'm sure.
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