Re: [bitcoin-dev] Pseudocode for robust tail emission

From: Eric <zhiguang53846@gmail•com>
To: Bitcoin Protocol Discussion <bitcoin-dev@lists•linuxfoundation.org>
Subject: Re: [bitcoin-dev] Pseudocode for robust tail emission
Date: Sat, 7 Jan 2023 18:22:02 -0500	[thread overview]
Message-ID: <CADv3YEbRX7fsG5ci6HH2RvU=PRZ=QQFkcEYY-dLQAaRsGHOi6A@mail.gmail.com> (raw)
In-Reply-To: <174889786-7eefd505bbf223af3d3a1101c7c3044d@pmq3v.m5r2.onet>

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if by security you mean the security of the currency, i don't think people
have much to worry about

coinbase as far as i know is starting to behave more bank-like.  i think
there is a nostr bot that does block updates and doesn't factor in coinbase
at all

On Sat, Jan 7, 2023 at 2:13 PM Jaroslaw via bitcoin-dev <
bitcoin-dev@lists•linuxfoundation.org> wrote:

>
> > Anyways if it turns out that fees alone don't look like they're
> supporting enough security, we have a good amount of time to come to that
> conclusion and do something about it.
>
> The worst-case scenario is that the first global hashrate regression may
> take place in 2028.
> Instead of the average price increase at least x2 every halving - the
> global hashrate may gradually decrease from that point. Again, it would be
> the worst-case scenario.
>
> In my proposal you don't need to think about any calculations - just
> simple logic which we have right now. No hardcoded values and the free
> market in its finest - self-regulating the level of taxation of parties
> involved, but with opposite interests. And the mechanism would try to fix a
> global hashrate regression if appear.
> In other words: let's be optimistic regarding fees, but with emergency
> mechanism built-in just in case.
> The only drawback here is that the system is already running.
>
> In my personal opinion avoiding long-term global hashrate regression is
> more important for store of value feature than the 21M schelling point (or
> trap...)
>
>
>
>
> W dniu 2023-01-04 17:03:33 użytkownik Billy Tetrud <billy.tetrud@gmail•com>
> napisał:
> > In Bitcoin "the show must go on" and someone must pay for it. Active
> [and/or] passive users
>
>
> I certainly agree.
>
>
> > or more precisely: tiny inflation
>
>
> 👍
>
>
> > Right now security comes from almost fully from ~1.8% inflation.
>
>
> Best I could find, fees make up about 13% of miner revenue. So yes, the
> vast majority of security comes from coinbase rewards. I assume you're
> implying that ~13% of today's security is not enough? I would love to see
> any quantitative thoughts you have on how one might determine that.
>
>
> Have there been any thoughts put out in the community as to what size of
> threat is unlikely enough to arise that we don't need to worry about it?
> Maybe 1% of the yearly government budgets of the world would be an upper
> bound on how much anyone would expect could realistically be brought to
> bear? Today that would be maybe around $350 billion.
>
>
> Or perhaps a better way to estimate would be calculating the size of the
> motivation of an attacker. For example, this paper seems to conclude that
> the US government was extracting a maximum of ~$20 billion/year in 1982
> dollars (so maybe $60 billion/year in 2022 dollars if you go by CPI). If we
> scale this up to the entire world of governments, this seems like it would
> place an upper bound of $180 billion/year of seigniorage extraction that
> would be at risk if bitcoin might put the currencies they gain seigniorage
> from out of business. Over 10 years (about as far as we can expect any
> government to think), that's almost $2 trillion.
>
>
> Whereas it would currently cost probably less than $7 billion to purchase
> a 50% share of bitcoin miners. To eventually reach a level of $350 billion,
> bitcoin's price would need to reach about $800,000 / bitcoin. That seems
> within the realm of possibility. To reach a level of $2 trillion, you'd
> need a price of $4.3 million/bitcoin. That's still probably within the
> realm of possibility, but certainly not as likely.  If you then assume we
> won't have significant coinbase rewards by that point, and only 13% of the
> equivalent revenue (from fees) would be earned, then a price of ~$6 million
> would be needed to support a $350 billion and $34 million to support a $2
> trillion security. I think that second one is getting up towards the realm
> of impossibility, so if we think that much security is necessary, we might
> have to rethink things. Its also quite possible, as the network of people
> who accept and use bitcoin as payment grows, that the fee market will grow
> superlinearly in comparison to market cap, which would make these kind of
> high levels of security more realistic.
>
>
> Anyways if it turns out that fees alone don't look like they're supporting
> enough security, we have a good amount of time to come to that conclusion
> and do something about it.
>
>
> > Deflation in Bitcoin is not 1:1 matter like in gold, for example...
> Deflation in Bitcoin is more complex issue
>
>
> It's helpful to keep our language precise here. Price inflation and
> deflation act identically in bitcoin and gold and anything else. What you
> seem to be talking about at this point is monetary inflation (specifically,
> a reduction in it) which of course operates differently on the machinery of
> bitcoin than it does in the machinery of gold or other things. Whereas my
> comment about you mentioning Gresham's law was specifically talking about
> price inflation, not the effects of the coin emission machinery in bitcoin.
>
>
>
>
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