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0 sats \ 10 replies \ @anon 25 Jul \ on: The Tail Emission Attack On Bitcoin - This is not a negotiation bitcoin
Fees raising ever higher in perpetuity spells certain doom for self custody bitcoin and lighting. It raises the minimum amount of lightning that can be settled on-chain and quickly increases reasonable transfer sizes for people storing their bitcoin in self-custody. For any foreseeable future, if block sizes aren't modified to become adaptable and/or tail emissions added we will face an ever centralized and custodial future with all the fractional reserve banking, censorship, debanking etc. that comes with that. I'm deeply curious to hear counterarguments to this.
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Each halving reduces miners reward from an increase in supply. Assuming equal demand for transactions, this increases transaction fees to cover the lost mining reward. If we desire for the market cap of bitcoin to rise while maintaining or even increasing the amount of decentralization, then transaction demand rises. Transaction demand increasing while mining reward decreasing ensures that transaction fees keep rising if these premises are met.
One way to resolve this scenario is to increase block size as transaction demand increases, this fits more transactions on the same block thus nullifying the increase in fees assuming the size increase is proportional to transaction demand increase.
Another way is tail emissions, ensuring a basal layer of mining reward ensures that the transaction fee remains a supplemental reward instead of the sole reward. This is extremely unlikely to be implemented as you've pointed out, it changes the BTC monetary policy fundamentally.
I hope this answers your question, I welcome any corrections or counterarguments.
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One way to resolve this scenario is to increase block size as transaction demand increases, this fits more transactions on the same block thus nullifying the increase in fees assuming the size increase is proportional to transaction demand increase.
are you familiar with the common arguments against block size increase?
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Yes, I wish that each block could fit infinite transactions in 1 byte but since we're space limited we must weigh tradeoffs.
I'm more in favor of a dynamic block size similar to Monero, this can be tuned to adapt to spikes in demand and balance blockchain size and fee cost adaptively.
I'm always open to superior solutions, though, if you know of any I'd love to hear them.
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I'm more in favor of a dynamic block size similar to Monero, this can be tuned to adapt to spikes in demand and balance blockchain size and fee cost adaptively.
how does a dynamic block size have better trade-offs than increasing the maximum block size?
I'm always open to superior solutions, though, if you know of any I'd love to hear them.
I don't
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I disagree completely with that. You're thinking linearly in one way, on-chain transactions will still be possible to regular people there is no need to implemente money printing to debase Bitcoin. Debasing Bitcoin is a far bigger issue, at this point txs are free because what you are sending is worthless
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Transaction fees are about $.50 these days, depending on time of day, obviously. What happens when they are $5.00? Well I'd argue any transaction <$20 would be unthinkable, and anything up to $100 would be rare. Anybody DCAing into self custody would need to keep their funds in their CEX for even longer. Anybody using DEXs like Bisq would be priced out of smaller transactions.
This situation looks real grim in the advent of $50 transactions (assume today's money for all of these prices). People keep their money in CEXs for much much longer, probably only withdrawing into self custody every few thousand dollars worth, if even. The Bisq market would likely be devoid of sub $1000 transactions.
Another factor too is the safety of the lightning network. As it stands now, in case of dispute, channels can always be resolved on chain. When transactions are $0.50, at worse you lose $0.50. When transactions are $5 or $50, you stand to lose a lot if there are bad actors trying to double spend or other attacks. Transaction fee decreases lightning security as it stands NOW, but I'm hopeful innovations like channel splicing, sidechains, etc. could resolve this threat.
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Let the free market resolve those issues, the more you try to fix one thing, 10 more other things will break no doubt. This is why most of these fixes are bigger problems down the road
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