Subject: Re: [bitcoin-dev] Bitcoin covenants are inevitable

From: Giuseppe B <[email-masked]>
Date: Sun, 3 Jul 2022 12:30:52 +0200

Bitcoin's finite supply is the main argument for people investing in it,
the whole narrative around bitcoin is based on its finite supply. While it
has its flaws and basically condemns bitcoin to be only used as a store of
value (and not as a currency), I don't think it's worth questioning it at
this point.

Just my 2 sats.

Giuseppe.

On Sun, Jul 3, 2022, 11:44 AM Peter Todd via bitcoin-dev <
[email-masked]> wrote:

> On Wed, Jun 29, 2022 at 12:44:11PM +0200, Kate Salazar via bitcoin-dev
> wrote:
> > > On an idealistic level, I agree with Keagan that it would make sense to
> > > have "a balance of fees to that effect". I think doing that would be
> > > technically/economically optimal. However, I think there is an enormous
> > > benefit to having a cultural aversion to monetary inflation and the
> > > consequences of convincing the bitcoin community that inflation is ok
> could
> > > have unintended negative consequences (not to mention how difficult
> > > convincing the community would be in the first place). There's also the
> > > economic distortion that inflation causes that has a negative effect
> which
> > > should also be considered. The idea of decaying utxo value is
> interesting
> > > to consider, but it would not solve the economic distortion that
> > > monetary inflation causes, because that distortion is a result of
> monetary
> > > devaluation (which decaying utxos would be a form of). Then again,
> maybe in
> > > this case the distortion of inflation would actually be a correction -
> > > correcting for the externality of benefit received by holders. I'm
> > > stream-of-consciousnessing a bit, but anyways, I suspect its not worth
> the
> > > trouble to perfect the distribution of bitcoin blockchain security
> costs to
> > > include holders. Tho, if I were to go back in time and influence how
> > > bitcoin was designed, I might advocate for it.
> > >
> >
> > Pool operators are free to request larger fees from older utxos, or from
> > all utxos, or from newer utxos, at their judgement, looking at the
> > blockspace demand census and at what the other pool operators are doing.
> > This is not consensus, it's policy. It's not a technology problem, it's
> > solved above in the social layer.
>
> If pool operators can easily collude like you are proposing, we have a
> serious
> problem with pool centralization.
>
> What you would actually expect in a healthy Bitcoin ecosystem is for some
> pool
> operators to defect, and them winding up mining those transactions for
> market-based fees, eventually forcing the pool operators who are trying to
> charge a discriminatory premium to give up.
>
> --
> https://petertodd.org 'peter'[:-1]@petertodd.org
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