Re: [bitcoin-dev] Surprisingly, Tail Emission Is Not Inflationary

From: Eric Voskuil <eric@voskuil•org>
To: alicexbt <alicexbt@protonmail•com>
Cc: Bitcoin Protocol Discussion <bitcoin-dev@lists•linuxfoundation.org>
Subject: Re: [bitcoin-dev] Surprisingly, Tail Emission Is Not Inflationary
Date: Sun, 10 Jul 2022 10:42:59 -0700	[thread overview]
Message-ID: <F2362784-F181-4A3D-8A8F-C906CC65AB53@voskuil.org> (raw)

> On Jul 10, 2022, at 07:17, alicexbt <alicexbt@protonmail•com> wrote:
> Hi ZmnSCPxj,
> 
> 
>> Thus, we should instead prepare for a future where the block subsidy must be removed, possibly before the existing schedule removes it, in case a majority coalition of miner ever decides to censor particular transactions without community consensus.
>> Fortunately forcing the block subsidy to 0 is a softfork and thus easier to deploy.
> 
> `consensus.nSubsidyHalvingInterval` for mainnet in [chainparams.cpp][1] can be decreased to 195000. This will reduce the number of halvings from 34 to 14 and subsidy will be 0 when it becomes less than 0.01 although not sure if this will be a soft fork.

Soft fork, though a bit aggressive, as it would invalidate all existing blocks above the first new halving height block which claimed more than the reduced reward.

Increasing the value would be a hard fork, as it would validate blocks that would previously have been invalid, as opposed to a soft fork, which invalidates blocks that would previously have been valid.

e

> I doubt there will be consensus for it because all the [projections and predictability][2] about bitcoin(currency) would be affected by this change. Maybe everyone can agree with this change if most of the miners start being 'compliant' like one of the coinjoin implementation.
> 
> [1]: https://github.com/bitcoin/bitcoin/blob/master/src/chainparams.cpp#L66
> [2]: https://en.bitcoin.it/wiki/Controlled_supply
> 
> 
> /dev/fd0
> 
> Sent with Proton Mail secure email.
> 
> ------- Original Message -------
> On Saturday, July 9th, 2022 at 9:59 PM, ZmnSCPxj via bitcoin-dev <bitcoin-dev@lists•linuxfoundation.org> wrote:
> 
> 
>> Good morning e, and list,
>> 
>>> Yet you posted several links which made that specific correlation, to which I was responding.
>>> Math cannot prove how much coin is “lost”, and even if it was provable that the amount of coin lost converges to the amount produced, it is of no consequence - for the reasons I’ve already pointed out. The amount of market production has no impact on market price, just as it does not with any other good.
>>> The reason to object to perpetual issuance is the impact on censorship resistance, not on price.
>> 
>> 
>> To clarify about censorship resistance and perpetual issuance ("tail emission"):
>> 
>> * Suppose I have two blockchains, one with a constant block subsidy, and one which had a block subsidy but the block subsidy has become negligible or zero.
>> * Now consider a censoring miner.
>> * If the miner rejects particular transactions (i.e. "censors") the miner loses out on the fees of those transactions.
>> * Presumably, the miner does this because it gains other benefits from the censorship, economically equal or better to the earnings lost.
>> * If the blockchain had a block subsidy, then the loss the miner incurs is small relative to the total earnings of each block.
>> * If the blockchain had 0 block subsidy, then the loss the miner incurs is large relative to the total earnings of each block.
>> * Thus, in the latter situation, the external benefit the miner gains from the censorship has to be proportionately larger than in the first situation.
>> 
>> Basically, the block subsidy is a market distortion: the block subsidy erodes the value of held coins to pay for the security of coins being moved.
>> But the block subsidy is still issued whether or not coins being moved are censored or not censored.
>> Thus, there is no incentive, considering only the block subsidy, to not censor coin movements.
>> Only per-transaction fees have an incentive to not censor coin movements.
>> 
>> 
>> Thus, we should instead prepare for a future where the block subsidy must be removed, possibly before the existing schedule removes it, in case a majority coalition of miner ever decides to censor particular transactions without community consensus.
>> Fortunately forcing the block subsidy to 0 is a softfork and thus easier to deploy.
>> 
>> 
>> Regards,
>> ZmnSCPxj
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