Subject: Re: [bitcoin-dev] Block solving slowdown question/poll

From: Andrew Cann <[email-masked]>
Date: Wed, 25 Mar 2020 11:23:02 -0400

Hi, thanks for the replies.

> Anyway, yes, your idea is fundamentally broken because a zero block reward
> happens because creating even one more satoshi will push the amount of
> bitcoin over 21,000,0000, breaking the meaning of "bitcoin," or, if you
> like, creating a fundamental contradiction in our use of the term. 

I wouldn't really consider that fundamentally broken. It changes the meaning of
"bitcoin", but so does every upgrade to the protocol. The worst problem I can
see with this is that there's probably a lot of software out there which
assumes a cap of 21M. But we'd have years to find and fix those bugs.

> They already do so, via an implicit "field", known as the transaction fee.
> This makes the vote for how much security is needed to be costly to the
> voter, which is appropriate: you pay for your security.

This isn't the same thing though, economically / game-theoretically speaking.
Transaction fees are only paid when bitcoins get moved. There's no on-going
cost for people holding bitcoins (assuming they're doing their day-to-day
transactions almost entirely off-chain, which is something that's only going to
become more common). More to the point, the transaction fee is only set by the
current demand for block space. If transaction fees drop too low to maintain a
secure hash rate then people *could* willingly pay more than they need to to
get their transactions mined, but it's unlikely they will since it'd be cheaper
to just pay the minimum and hope that everyone else covers the costs of keeping
the network secure for them.

With the voting idea everyone decides what everyone pays (via dilution) to keep
the network secure. Choosing to signal a high inflation rate doesn't mean you
pay more than everyone else, just that you might shift the median, so there's
no tragedy-of-the-commons problem. Also, votes are weighted by the value of
the utxo, so people both vote and pay in proportion to the amount of bitcoin
they're holding.

Does this make sense? Or is there some game-theoretic reason I'm not seeing for
why transaction fees can never drop dangerously low in the first place?

 - Andrew