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101 sats \ 7 replies \ @Undisciplined 11 Jun \ parent \ on: Nobody is ready for high fees - Blockspace Media bitcoin
I'm pretty sure I know why, but explain it like I'm 5 please. Then, I'll offer my follow up thought.
I bet you know why, too, but for those who lack your gifts:
The idea that we have a resource that is finite -- after the end of the block reward, no more, ever -- is deeply unsettling, as the supply can only go one way. The first terror-inducing thing is literally lost btc. Some people rebut this with "thanks for making my btc more valuable" which is true on a surface level, but at a certain point becomes not true. If there were a catastrophic loss and half the btc in existence evaporated, the global response wouldn't be "Yay, I'm twice as rich!" but rather "This system is fucking stupid" or else "well, let's mint 10 million more coins I guess" and the ensuing chaos and civil warring.
Or at least, this is my hypothesis. Hopefully I'm wrong. Regardless, we can call this type "external loss".
UTXOs transforming into dust, as per the OP, and also here, is an example of "internal loss" -- the idea that tons of people in the world who'd been orange-pilled into putting their meager savings into btc only to find it unspendable, or spendable only after taking a devastating haircut. I understand that this needn't mean that normal people can never use btc; but that they'll only be able to use it under the auspices of new practices and institutions that have no current traction or that don't yet exist. Waiting a decade for some new lightning-based emergence, or for the beginnings of feasible cashu / fediment communities to spring up, develop their own institutional practices, etc., doesn't mean btc can't succeed, for some definition of succeed. But for the one I wanted, it seems pretty crushing on less than decades-long timescales.
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Alright, good, we're on the same page.
Bear in mind that I'm still pretty ignorant of the intricacies of all the different dynamic mechanisms at play.
My first thought is that if this started becoming a major systemic problem, that would result in lower on-chain fees, which would give people an opportunity to clean up their UTXO's.
Maybe the worse outcome is that it never becomes a major systemic problem and a bunch of people get screwed by being stuck with stranded sats.
In that world, I could imagine speculators essentially buying up these stranded sats at a discount on the chance that something gives and they'll eventually gain access to them.
What do you think? (and once again bear in mind that you have to talk to me like I'm 5)
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I like your perspective on this. If I expand a bit: the system is dynamic and self-adjusting. When it's super successful and lots of people want to use it, fee rates will be high. Therefore, it can't "fail" for this reason (tautology); as it began to fail, block space would free up, and fees would go down, solving the problem, at which point people would say "Yay, the problem is solved!" and the cycle would re-commence.
The logic works out. The question is, how much have we left out of the logic? Given the network effects at work, it's possible that the thing creaks forward into some semi-functional eternal state. It continues to exist, but it exists in a form that violates what most of us have considered to be its purpose up till now.
More briefly: perhaps it becomes a useful asset for a smallish number of global companies and HNWIs. But this isn't clear, either, given that the narratives that support this intangible thing having value in the first place are based on strata of belief; and if key elements of that belief erode, perhaps that story, too collapses like an arch whose keystone has crumbled.
The speculator buying stranded sats thread is the most interesting, not for that particular use case, although perhaps it could happen, like Jawas in Star Wars harvesting relics on a junk planet to scrape their living in the desert; but rather, as a creative / innovative look at what we might consider to be L2s (or L3s) that assume forms we hadn't imagined. I don't think that's enough to preserve the fiction of "sovereign cash for everyone" but would at least be interesting.
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and the cycle would re-commence.
Only if people don't improve their UTXO management, somehow. My hope is that after they get an opportunity to fix their temporary UTXO issue, they also adopt some sort of approach that won't lead to it again.
it's possible that the thing creaks forward into some semi-functional eternal state
That strikes me as the most serious concern.
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Only if people don't improve their UTXO management, somehow.
It's possible, but a lot of work is being done by "somehow" in that sentence. I would like to not pretend that a flotilla of btc personalities haven't spent the last x years beating their chests like Spartans and talking about the sacred duty of orange pilling Zimbabwean dirt farmers and god knows who else, people for whom $100 is years of savings. If btc is super successful, under the current tech and social institutions, those people are fucked and their sats are stranded.
We can (and should!) expand sovereignty into something functional for the actual world, and build the infra to support those definitions, so those people really can benefit from btc. But it will be a giant lift. It's not even in sight, as far as I can tell. So if that's what you mean by somehow I am fully with you -- it can happen and I suppose it will, eventually. But I would like to acknowledge the issue and accelerate eventually.
Or I'd like to be convinced that I'm missing something crucial and that this is all fine. That would be the most pleasant route, but I don't see a way atm.
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I would also like to be convinced that you're missing something crucial. Let me know if that happens.
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If lots quit using it, then likely the fees would go back down and there wouldn’t be as much dust.
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