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"If all the people around tells you that you’re drunk - maybe you're just drunk"

10.5k sats \ 72 comments \ @jk_14 22 Oct 2023 bitcoin

zaps forwarded to @SpaceHodler (40%) @petertodd (40%)

I'm not sure if there is such a sentence in english, but anyway...

Lawrence White, a prominent professor of economics at George Mason University says:

"that might not be enough to get enough miners to keep the system secure" https://finbold.com/economics-professor-identifies-future-security-threat-to-bitcoin/

And here: #245468 there is some interesting discussion about it with @SpaceHodler:

============

"The delay of halving breaks the 21M hard cap though, and doesn't even guarantee a finite supply, because the block reward might stay at a certain level forever. This introduces a variable that's hard to predict and completely redefines Bitcoin."

===

If bitcoin is dying due to lack of free market between active users and passive free-riders - what is the more important thing than to rescue Bitcoin from death? Free market is more important than finite supply, and yes - this is the only way to reach equilibrium between active and passive users - by step-by-step iteration to the certain level and stay there forever (just to allow Bitcoin to stay here forever) I'm glad finally someone understood the idea. Now you need some time to admit, unpredictable variable is free market at its finest :)

===

"It makes sense. Something akin to what the central banks do by setting interest rates, but algorithmic, leading to a 'natural' (rather than manipulated) level of inflation. But different, because it's directly tied to security. I haven't thought whether it would be an issue if it works in one direction only (halvings, but no doublings), but it might. When I was learning about Bitcoin, I heard "It costs you nothing to store your bitcoin (as opposed to, say, gold). You get security for free." and thought it sounded wonderful, but too good to be true. There is no free lunch and all that... I understand a lack of inflation is aligned with Austrian economics, but the Austrians didn't know a monetary system whose security was tied to inflation. So it's a new concept to wrap one's head around."

===

Yes, I'm not brave enough to propose "doublings" yet... ;) frankly speaking - I'm unconfortable enough with undermining Holy Graal 21M I wouldn't do that without my sureness that something must be done sooner or later with this long-term embedded problem. Yes, there is no such thing as a free lunch - I'm also fan of Milton Friedman here.

===

"It's not hard to imagine that even Satoshi may not have gotten it 100% right."

===

Very true. Satoshi forgot to implement free market between active and passive users, unfortunately. When you realise that he started the system from one edge case - i.e. inflation starting from infinity in the first block in fact, and stakeholders were able to survive this "early" phase with enormous annual inflation only due to "Numbers go up" (i.e. due to system expansion) - and system is simply going by design to the second edge case, i.e. with zero annual inflation. I don't know if we could find any example of staying in the edge case - as a healthy state for any system. And we are trying to grass-root building of alternative financial system - maybe the biggest challenge I met in my life...

============

And now is your time to argue with the annoying truth... ;)

view all related items

1230 sats \ 11 replies \ @03393ec3a3 22 Oct 2023

After thousands of hours of study, I agree. I cannot imagine how Bitcoin can have both product market fit and orderly chain advancement without a significant block subsidy. At the end of the day, fiat price of BTC does not matter. As a miner, if you can net more sats by reorging the last block than you can get from advancing the chain, then the game theory starts breaking.

The knee jerk response that users will simply pay greater fees strikes me as naïve. Aside from destroying product market fit, more fees relative to an already too meager block subsidy only increases the incentive to competitively reorg blocks instead of advancing the chain in an orderly way.

141 sats \ 0 replies \ @jk_14 OP 23 Oct 2023

As a miner, if you can net more sats by reorging the last block than you can get from advancing the chain, then the game theory starts breaking.

very true statement

the greed is a big force - big enough to establish something in a short period of time, and to kill something in a short period of time as well...

and we wouldn't be here if Satoshi would choose to build Bitcoin on something else than greed... because there would be no Stacker.News - because there would be no Bitcoin at all

1 sat \ 3 replies \ @kepford 22 Oct 2023

So the arguement is that miners will have more incentive to manipulate transactions in their favor than to live off fees? Wouldn't this behavior destroy trust in bitcoin and therefore destroy their business?

Just a thought.

221 sats \ 2 replies \ @03393ec3a3 23 Oct 2023

Miners cannot afford the luxury of low time preference - their bills occur monthly. They will likely be unaware their hashrate is undermining the chain. Once the subsidy is low, a great deal of hashrate will find its way to hashrate markets so that they can have significantly higher payouts from MEV. These markets tend to be commanded by low time preference actors.

0 sats \ 1 reply \ @kepford 23 Oct 2023

I dunno. I just don't see it. Maybe I'm missing something.

311 sats \ 0 replies \ @03393ec3a3 23 Oct 2023

Mining is extremely competitive, and every possible incentive is continuously explored to gain an edge. Even publicly traded miners are engaging in MEV: https://www.coindesk.com/business/2023/09/27/bitcoin-miner-marathon-reportedly-mines-invalid-btc-block/

"We utilize a small portion of our hash rate to experiment with our development pool and research potential methods to optimize our operations."

This is a transparent admission of MEV in action.

0 sats \ 5 replies \ @cyberpunk02 23 Oct 2023

In 2140 why wouldn't the next miner fee payment be more valuable than a reorg of the last block?.. The miner (likely a pool) would need to reverse one of their own transactions (where they purchased something in the real world?). One transaction worth more than the current miner reward is right now : ‎6.272 BTC $188,025 this is going up exponentially. Seems to me like any attack would be risky as hell.. I don't get the issue?.

141 sats \ 4 replies \ @03393ec3a3 23 Oct 2023

This can manifest much sooner than 2140, probably in about three halvings from now. All we need is for the value of the highest fees in the last block, plus the highest fees in the mempool to exceed the block subsidy. At that point, you get more sats from reorging the last block than you do from simply advancing the chain. At this point, the game theory starts unravelling.

This is a "gradually then suddenly" thing. Depending on market conditions, there will be small instances at first. Before long it becomes problematic. Then, users will be forced to increase their fees to incentivize their transactions to reliably mine into competing forks. Unfortunately, this further increases the incentive to reorg, as miners get even more sats by successfully reorging each successive block.

In case it helps clear up understanding, the price of BTC is immaterial here. The point is, the miner gets more sats by reorging than from orderly chain advancement (because they capture larger fees that outweigh the decreasing block subsidy).

21 sats \ 0 replies \ @CruncherDefi 23 Oct 2023

All we need is for the value of the highest fees in the last block, plus the highest fees in the mempool to exceed the block subsidy. At that point, you get more sats from reorging the last block than you do from simply advancing the chain.

It's not that simple.

If you are reorging the chain AND rest/most/significant_part of the network mines on-top of the last block; then your threshold for profitability of such action is significantly increased.

Effectively it means that you need to mine >1 successive blocks if you want to do the reorg. That changes the profitability equation a lot because of geometric scaling of hitting successive-blocks mined.

21 sats \ 2 replies \ @om 23 Oct 2023

Still don't see it. Suppose there's a block X at height N and a rogue miner desides to aim at replacing X rather than building on top of it. He successfully mines a block Y also at height N. However, he must keep the fees of Y lower than the fees of X, otherwise miners would build on top of X instead and he gets nothing. So rogue miners would gradually lower the fees of the block at height N until someone builds a block at height N+1. That doesn't sound like Bitcoin is dying or anything like that. Also users can cut the crap by using locktime to aim for a particular block height.

0 sats \ 1 reply \ @03393ec3a3 24 Oct 2023

Unless I misunderstand locktime, I don't see how either of these points is going to deter greedy mining. There is no need to reorg to have less fees, as plenty of new transactions are always percolating in. Likewise, locktime doesn't materially affect miners - the coinbase transaction will still sum to the same value and the winner will eventually get the sats.

0 sats \ 0 replies \ @om 24 Oct 2023

Locktime: you can set the locktime on your transaction so that it can only be included starting from the block N + 1 where N is the current block height. This way your transaction can't be included in a block with the current block height.

Reorgs: now I don't get you at all. I conjecture there might be confusion of reorg as in 51% attack scenario with greedy miner reorg (no 51% power). In the latter case the miner gets the coinbase reward anyway, so why does the coinbase size even matter?

600 sats \ 1 reply \ @SpaceHodler fwd 23 Oct 2023

One thing to consider:

In a half-bitcoinized world, I don't see many incentives to destroy Bitcoin, because people don't want to lose their money. A terrorist organization, a group of communists who hate people's ability to keep their wealth may want to do that, but they're unlikely to be able to engage sufficient resources.

If you have little to lose by destroying Bitcoin, it's because you're broke. And if you're broke, you can't buy any hash rate.

1050 sats \ 0 replies \ @jk_14 OP 23 Oct 2023

In a half-bitcoinized world, I don't see many incentives to destroy Bitcoin, because people don't want to lose their money.

ok, but here is my answer to consider too, an slightly modified version of Prisoner's Dilemma short description:

"The Prisoner's Dilemma is a standard example of a game analyzed in game theory that shows why completely rational _ large Bitcoin holders _ might not cooperate, even if it appears that it is in their best interests to do so."

in other words: "It's not a problem I'm switching-off my Antminers "for a while", because other holders will surely keep it running at loss... because they don't want to lose their money, ha"

133 sats \ 2 replies \ @Dash_1971 23 Oct 2023

Sounds like an attack on Bitcoin to me. Why are we even worrying about this now? There are 1000 higher priority things. Come back in 2-3 halvings time and see if this problem is starting to show signs of manifesting. I certainly can't see any now, as hash rate is up only so far.

161 sats \ 1 reply \ @03393ec3a3 23 Oct 2023

Hashrate is not a relevant measure versus an internal threat. Instead, that is simply a measure to deter external actors like an adversarial SHA256 chain or an upset nation. Hashrate markets allow hashrate malleability, and transitioning from a subsidy-heavy model to a fee-heavy model removes the incentive to behave in an orderly fashion. Misbehavior becomes increasingly profitable as fees increase and dominate the overall block reward.

As for why now, it is a question of risk/reward. As individuals continue to increase our stacks, we become increasingly concerned about risk. Once your stack is at a point where the potential for loss is a material concern, it becomes important to limit risk. Ideally, that can occur by removing tail risk from the project itself, rather than millions of HODLers limiting our exposure to the project.

Considering how many years it took to make a soft fork change like Taproot, I think this is a matter that needs to be discussed constantly. I suspect it will require 2-3 halvings to approach consensus around ways for handling the matter. Plus, I think it is important to have the dialog running so that newcomers to understand that there are aspects of Bitcoin that are far more important and value-add than a hard cap. Decentralization, rules with rulers, and reliability are crucial.

71 sats \ 0 replies \ @jk_14 OP 23 Oct 2023

I think this is a matter that needs to be discussed constantly. I suspect it will require 2-3 halvings to approach consensus around ways for handling the matter.

This.

41 sats \ 1 reply \ @DeltaClimbs 23 Oct 2023

So much gibberish, so little humility as evidenced by the lack of even a single question mark

You are not worth the time you will get as a free rider on the kindness of strangers who will explain your foolishness, but to arrogant fools like you, I only have this to say:

If you don't like it, fork off 🖕

70 sats \ 0 replies \ @jk_14 OP 23 Oct 2023

"Nothing induces a bigger annoyance than the Truth"

so true...

174 sats \ 12 replies \ @jeff 23 Oct 2023

I think we should plan a fork that is set to launch ~12 years from now, that attempts to address the security budget challenge.

If you do it far enough out, it's not a shock to the market nor miners, and can serve as an expected dividend, rather than an unknown cliff-like risk.

There are lots of ideas, but all are contentious.

21 sats \ 0 replies \ @03393ec3a3 23 Oct 2023

I would support this. At a minimum, I think we should at least be having the conversation and let the community come up with a contingency plan.

70 sats \ 1 reply \ @Dash_1971 23 Oct 2023

Go ahead and fork. Not running it on my node, though.

21 sats \ 0 replies \ @jeff 23 Oct 2023

Exactly. Love it.

21 sats \ 5 replies \ @elvismercury 23 Oct 2023

The interesting thing is to talk through these possibilities now, so they can be vetted, attacked, hardened. It would be dumb to mess w/ stuff that isn't broken. But it would be equally dumb to close your eyes and pretend that everything will invariably be fine.

I can see a tail-emission fork getting launched when / if things start getting dodgy. In fact, a number of forks will be launched, with different capabilities and tradeoffs, between now and that day. It will be quite the clusterfuck trying to keep them straight -- perhaps we'll also have some kind of meta-system that replays transactions across all relevant chains for people who don't want to gamble and commit a-priori to some vision.

This would be an interesting use case to think through in detail. Has anyone ever written on it?

1 sat \ 1 reply \ @SpaceHodler fwd 23 Oct 2023

perhaps we'll also have some kind of meta-system that replays transactions across all relevant chains for people who don't want to gamble and commit a-priori to some vision.

That may be impossible, e.g. if fork A is mining tail emission coins that fork B isn't; you can't map those coins onto fork B where they don't exist.

1 sat \ 0 replies \ @jeff 23 Oct 2023

I think they are talking about pre-fork UTXOs.

0 sats \ 2 replies \ @jk_14 OP 23 Oct 2023

a number of forks will be launched, with different capabilities and tradeoffs

No need to have clusterfuck of forks trying, because in my opinion that's the most simple way to handle it:

If we would have four years long network difficulty regression - then it's emergency, and new code handling such danger - should delay halving to the next halving, until difficulty will recover

if there is no such emergency situation - there is no trigger, and old and new code would work together like a charm = so there is no hard fork at all

simple, conservative (and beautiful) solution in my opinion, so it fits to Bitcoin very well

such a solution is fueled 100% by free market only and the natural inflation level is set by Bitcoin itself, on some certain, completely unpredictable level (so, free market in its finest)

100 sats \ 0 replies \ @SpaceHodler fwd 23 Oct 2023

That's a good point. If only forks off when the condition for delaying halving is met, and if it does, it does so for an arguably good reason. Tail emissions may not address the issue at all if it crops up before they would kick in.

1 sat \ 0 replies \ @jeff 23 Oct 2023

No need to have clusterfuck of forks

I don't think anybody can stop forks. It comes down to market demand and social consensus.

21 sats \ 1 reply \ @DeltaClimbs 23 Oct 2023

Thanks for the shitcoin dividend, arrogant retard

1 sat \ 0 replies \ @jeff 23 Oct 2023

I'd like to understand better, why it is arrogant to suggest planning something?

0 sats \ 0 replies \ @jk_14 OP 23 Oct 2023

A better scenario is when the vast majority understands...

100 sats \ 6 replies \ @om 23 Oct 2023

Even if halvings do promote reorgs I don't care. 21M or go fork yourself. A reorg isn't the end of the world.

0 sats \ 5 replies \ @jk_14 OP 23 Oct 2023

reorg[s] ~~isn't~~ aren't the end of the world.

... but the end of Store-of-Value for sure.

0 sats \ 2 replies \ @CruncherDefi 23 Oct 2023

but the end of Store-of-Value for sure.

Says who?

Evidence points to this statement being false. Reorgs happened many time and bitcoin is fine. That's why we wait for 6 confirmations until we consider tx finalized.

120 sats \ 0 replies \ @jk_14 OP 23 Oct 2023

And that's why I'm consistently writing about: the network security regression, and not reorgs. Swap it, then:

Significant and four years long network security regression isn't the end of the world.

Yes, it is.

0 sats \ 0 replies \ @SpaceHodler fwd 23 Oct 2023

It's a bit over my head, but if reorgs become more profitable, would increasing the (AFAIU unofficial) number of confirmations solve the issue (effectively making txs take longer, but growing at a logarithmic rate)?

0 sats \ 1 reply \ @om 23 Oct 2023

Then fork it like BCH did and let the market decide.

0 sats \ 0 replies \ @jk_14 OP 23 Oct 2023

there is no need to because if the Store-of-Value will collapse - and in the absence of a free market between active and passive participants, it's "not if, but when" - there will be patch available ASAP (and such guys like you will be the most insisting on releasing it... ;)

111 sats \ 9 replies \ @kepford 22 Oct 2023

This is one those posts I feel dumb after reading. I mean no offense. It is entirely possible I just dont get the point but this sounds like a lot of nothing to me.

Would the summary of all this be the concerns about security budget? Seems like a looong way to say that. If I'm wrong I'm here to learn.

111 sats \ 3 replies \ @DeltaClimbs 23 Oct 2023

Yeah, this guy's 6 months from being a full blown shitcoiner. I've seen this exact thing. These guys will come in thinking they're bitcoiners, but will have some academic they're infatuated with. Classic "I'm new to bitcoin and I'm here to fix it" and lots of noobs in general here as evidenced by comments. Lots of really retarded people here in general these days -- special sort of retarded to be on StackerNews as a non-bitcoiner.

0 sats \ 2 replies \ @jk_14 OP 23 Oct 2023

this guy's 6 months from being a full blown shitcoiner. I've seen this exact thing. These guys will come in thinking they're bitcoiners, but will have some academic they're infatuated with.

this guy i.e. professor is not on StackerNews and I'm in Bitcoin since 2012, lol

100 sats \ 1 reply \ @DeltaClimbs 23 Oct 2023

Wow, that makes it even more cringe... have you never asked questions to anyone this entire time?

0 sats \ 0 replies \ @jk_14 OP 23 Oct 2023

I was able not only to pinpoint the lack of free market area in Bitcoin, not discovered or forgot by Satoshi... (there is no free market between active and passive type of users and noone has denied it so far)

I was even able to propose how to fix it in the best possible way, because with full utilise of the free market, i.e. with the free market discovery and free market setting the natural inflation rate

who should I ask if I'm the most clever, then? ;))

0 sats \ 4 replies \ @jk_14 OP 22 Oct 2023

Yes, Lawrence White, a prominent professor of economics at George Mason University says in the attached article above - about his concerns regarding Bitcoin security budget. He says about it quite straightforward, imo...

21 sats \ 1 reply \ @Dash_1971 23 Oct 2023

Since when do we listen to "prominent professors of economics"? This whole thread is highly sus to me. Just what problem evident in the year 2023 are you so earnestly trying to address with this? Seems like FUD.

0 sats \ 0 replies \ @jk_14 OP 23 Oct 2023

Since when do we listen to "prominent professors of economics"?

"If all the people around [and not only some single professor of economics] tell you that you’re drunk - maybe you're really drunk..."

12 sats \ 1 reply \ @kepford 22 Oct 2023

People have proposed that it [Bitcoin] will become the world’s money someday, and I’m saying I don’t see that being very likely. Other cryptocurrencies with a different design that gives them a more stable purchasing power could possibly play a wider role, and of course, stablecoins have grown to play a pretty substantial role

Also this gentleman.

0 sats \ 0 replies \ @jk_14 OP 22 Oct 2023

"People have proposed that it [Bitcoin] will become the world’s money someday, and I’m saying I don’t see that being very likely."

Me: I wouldn't do that without my sureness that something must be done sooner or later with this long-term embedded problem.

Let say, just to make professor seeing it again.

2 sats \ 17 replies \ @kepford 22 Oct 2023

What are active and passive users of bitcoin and why are you calling any user a free rider?

0 sats \ 16 replies \ @jk_14 OP 22 Oct 2023

active users - users actively using on-chain transactions in Bitcoin, let say those who are paying transactional tax/fee

passive users - stakeholders using Bitcoin mainly as a Store-of-Value, so those who are paying inflation tax/fee

as a side note: miners are able to earn only as much, as both these groups with opposite interests - are able to pay miners in their own (transactional or inflation) tax/fee

120 sats \ 3 replies \ @DeltaClimbs 23 Oct 2023

Hey retard, quit free riding life itself by having smarter people explain why you are retarded to you for free!

0 sats \ 2 replies \ @jk_14 OP 23 Oct 2023

"If all the people around tell you that you’re drunk - maybe you're just drunk..." lol

10 sats \ 1 reply \ @DeltaClimbs 23 Oct 2023

Exactly, many bitcoiners can tell you why you're dumb, while the people echoing your concerns are mostly shitcoiners. Sober up

0 sats \ 0 replies \ @jk_14 OP 23 Oct 2023

go ahead and argue even more with the annoying truth... ;)

12 sats \ 11 replies \ @kepford 22 Oct 2023

I've never heard people saving gold called free riders. Also never heard this characterization of Bitcoiners. Seems wrong to me.

1 sat \ 10 replies \ @jk_14 OP 23 Oct 2023

I've never heard people saving gold must keep gold mines working - just to preserve the value of gold that they already posses...

keeping completely unprofitable gold mines - as working, just because the amount of gold they are able to mine - is negligible now in the comparsion to the past times...

1 sat \ 9 replies \ @kepford 23 Oct 2023

You are making an argument against something I'm not saying.

My overall impression of his arguement and yours is that there a many variables that we can't know and therefore it is not hard to come up with a scenero where theres a problem we do not have a solution for yet. How could we.

Assumptions. That mining would be unprofitable. We dont know the cost of energy the value of bitcoin in relation to that cost. We also do not know the volume of transactions as well as the fee levels.

Then he jumps to another crypto... Well there are many issues with that move that most bitcoiners already see so it seems this is coming from a misguided view of the soundness of bitcoin.

21 sats \ 6 replies \ @03393ec3a3 23 Oct 2023

Profitability is immaterial, as is BTC price. All that matters is that less subsidy means increased incentive to reorg previous blocks rather than advance the chain in an orderly fashion.

If I can get 1 BTC to advance the chain or 5 BTC to reorg the last block with the most expensive transactions already there plus the most expensive ones in the mempool since then, then the game theory securing orderly advancement starts to deteriorate.

0 sats \ 5 replies \ @kepford 23 Oct 2023

Isn't there more to the game theory than this one angle? This view seems to discount other factors.

21 sats \ 4 replies \ @03393ec3a3 23 Oct 2023

There are plenty of other factors I can think of, such as out-of-band payments, but they only serve to worsen the outlook. At the end of the day, miners are mining blocks to get BTC, and reducing the subsidy reduces their incentive to do that in the expected, orderly fashion.

If I'm missing something, please share so I can put my mind at ease. Until this is ironed out in my mind, I cannot be a 13%-er.

view replies

0 sats \ 0 replies \ @SpaceHodler fwd 23 Oct 2023

We dont know the cost of energy the value of bitcoin in relation to that cost.

But does the security of the network even depend on that? I think it only depends on how much hash rate a malicious entity (such as a government trying to destroy Bitcoin) can control in relation to the total hash rate.

Let's say the US gov wants to destroy it. If the energy prices rise by 10x, the hash rate will drop, which may make the network seem more vulnerable to attacks, but the US gov's hash rate will also drop, keeping their share of the total hash rate (and therefore the network's vulnerability) constant. Unless they can somehow control the use of energy through coercive legislation enforced effectively.

In other words, it depends on the level of centralization of power in the world. Which bitcoiners like to believe Bitcoin will decrease (along the lines of what "The Sovereign Individual" predicts...)

0 sats \ 0 replies \ @jk_14 OP 23 Oct 2023

"You are making an argument against something I'm not saying."

No, I just modified argument that you said - to show you better the difference between gold holder and Bitcoin holder.

Bitcoin is going from the one edge case (infinity) to the opposite edge case (zero) with the inflation, I hope you agree.

Show me any example of a healthy system, which is staying in the middle of the edge case, please.

1 sat \ 3 replies \ @iguano 23 Oct 2023

who is going to attack the system if ALL the miners revenue are cut in half?

0 sats \ 2 replies \ @jk_14 OP 23 Oct 2023

I have written it already:

miners are able to earn only as much, as both these groups with opposite interests - are able to pay miners in their own (transactional or inflation) tax/fee

Stakeholders were paying mainly so far, and active users were de facto free-riders, paying even as tiny for transaction as 1sat/vbyte

With every halving this ratio of cost of the Bitcoin network security - is moving gradually from passive stakeholders to active users.

21 sats \ 1 reply \ @iguano 23 Oct 2023

Maybe I'm not as smart as you. But how a miner that went out of business because they can't maintain operations (because electricity costs, employees costs, maintenance of equipment, upgrade to new technologies, etc.) can attack a network of miners that are still in business and CAN maintain operations? It doesn't make any sense to me.

0 sats \ 0 replies \ @jk_14 OP 23 Oct 2023

as you can check around, I'm focused on network security (difficulty) regression

because decreasing security will erode Store-of-Value (purchasing power of Bitcoin) , what is advertised as the one of most impotant Bitcoin features/properties...

And potential other consequences - like for example if there is only 25% of network hashrate of the past ATH, and rest 75% of ASIC hardware is idle and ready to use, who knows if not in a malicious way - that's only another, additional consequence here.

0 sats \ 0 replies \ @Lux 23 Oct 2023

the economists arrived from twatter, brace yourselves