748 sats \ 23 replies \ @artdesignbySF 21 Oct 2022 \ on: I'm Peter Todd, cryptochronomancer/web-π dev, AMA bitcoin
Can we return to the tail emission discussion in a hundred years or so? Only if there actually is some kind of evidence that it might be needed.
Nah, 100 years is much too far away:
The inflation rate drops off to essentially zero much faster than that. Sure, the last sat will be mined in 100 years or something. But that last sat is irrelevant. Getting below 0.1% inflation will happen in something like 10 years; we're at about 1.5% already.
Anyway, if you really want your 21 million meme we can always do demurrage instead. That can be done in a soft-fork.
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To hear you describe it as a meme is revealing.
This is one of the top line Bitcoin features many people have signed up for.
Absolute scarcity. No compromises.
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...and what you said is precisely what memes are: an idea, behavior, or style that spreads by means of imitation from person to person within a culture and often carries symbolic meaning representing a particular phenomenon or theme.
Absolute scarcity. No compromises.
That's a totally symbolic statement. We don't even have absolute scarcity on any human time frame: the last sat will be mined after we're all dead.
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In the context you used "meme", it could be seen as derogatory. Whether that was your intention or not probably doesn't matter. the "meme" usage is not my main point.
My main point is that many people in Bitcoin believe that a change to the supply in any way is heresy worth fighting over. If you can change something as fundamental as the overall supply on the fear of some possible bad outcome for the miners, then the integrity of the project is in question. A contentious fork is in the offering be default on this file.
As for your last point on my apparently symbolic statement. it's a semantic one.
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If you can change something as fundamental as the overall supply on the fear of some possible bad outcome for the miners, then the integrity of the project is in question.
Miners are who keep Bitcoin secure. A "bad outcome for miners" is in this case a bad outcome for everyone.
We want mining to be reasonably profitable, and something anyone can usefully do with a minimal amount of capital and expertise. Setting up a new pool should be easy to do with a minimal % of total hashing power; you shouldn't need fancy MEV optimization or cleverness to be profitable.
For example, if OFAC tries to get Bitcoin blocks censored, we're in a much better position if it's easy for people to setup new pools that ignore OFAC. That won't be true if miners have to scramble to extract value from transaction fees in complex ways. It also won't be true if reorg attacks make pools under a certain size unprofitable.
Even the 1.5%/year we're currently paying in inflation is tiny compared to the overall value of Bitcoin. I'd be happy to pay that forever to ensure my savings were safe.
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My impression is that miners are hired security guards who get to order the transactions. Nodes are ultimately what secure the network. Though i suspect it's a shared responsibility among many elements.
If the problem you describe is accurate, which I don't believe it is, would not a less harmful solution be to reset the hashing algorithm to a different scheme instead of playing central banker like games with the supply?
Once you open up this door, there's no going back. Before you know it, Bitcoin will have it's own FMOC meetings for adjusting tail emission rates! (I'm being cheeky here, but also not.)
See to me, the scenarios you describe are theoretical and all just smells like using a hammer for situations where a scalpel is required. This top down, oh let's adjust this radioactive lever that should never be touched to address possible scenarios seems premature.
Which is maybe putting words in your mouth. I think you've always said this is probably a potential problem to look out for. Not a problem that needs to be fixed now or in the near future?
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My impression is that miners are hired security guards who get to order the transactions. Nodes are ultimately what secure the network.
Nah, you need both. One or the other isn't enough by itself, especially when you're talking about external attackers.
Anyway, if you think changing the 21 million limit is so radioactive, what do you think about demurrage? We can do essentially the exact same thing, economically speaking, with a soft-fork that keeps the 21 million limit.
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Having just read it and got the jist: oh wow that's some creative thinking.
ie locking up rewards to get them to mine for them again lol. hmmm.
lots of issues with getting miners to accept that one as a softfork. (UASF it lol)
I mean, I prefer it to the 21 million supply modification, but I'm not entirely certain it's aim is accurate either for incentives/outcomes.
It's interesting though, gonna have to chew on it.
We want mining to be reasonably profitable
Doesn't the difficulty adjustment help here? If it's not profitable and miners drop out of the network, the difficulty will decrease until it gets profitable enough such that miners are willing to mine again?
I thought there is a similar equilibrium here as you described with inflation rate and the rate of coin loss?
I am more afraid in too many miners dropping out too fast such that the difficulty adjustment won't happen for a very long time.
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You forgot the second part of that quote:
We want mining to be reasonably profitable, and something anyone can usefully do with a minimal amount of capital and expertise.
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How does that answer my question if the difficulty adjustment isn't making sure that there are always miners who are profitable? I saw your reply as an argument for tail emission.
I can see how tail emission could help that miners are "reasonably profitable" but I can't see how it helps with the second part of that quote. Or was that just a general statement?
Then I am not sure if that is possible at all: How do you want to level the field such that mining is "something anyone can usefully do with a minimal amount of capital and expertise"?
In a highly competitive market, my understanding is it will never be easy to get in and turn a profit without a lot of capital and/or expertise.
I may not totally understand tail emissions. If I choose not to move my coins for 20 years because they are perfectly fine where they are, and I’m passing them down, does that mean my coins could become tail emissions and be stolen from me?
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No. Some % of the value of them would be "stolen" in the sense that the currency had been inflated. But the coins themselves wouldn't be stolen.
Equally, in demurrage, you'd have to pay some % of the coin to spend it. With 0.1%/year, that'd be 7.5% if you moved your coins after 75 years. Much lower than inheritance tax!
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Thanks for the explanation!
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Isn't the moment when we will see first "destructive halving" - i.e. network difficulty was not able to recover during long four years after given halving - a perfect moment to switch-off halvings completely?
Because things destructive to the Bitcoin - should be eliminated (no matter from where they are)
In other case I'm pretty sure we will have textbook example of "Let Microstrategy Run Antminers" prisoner's dilemma here...
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That very well could happen! Though it's also possible that fees could just spike upwards while people try to get their txs mined.
Regardless, the idea of halving every 4 years was a really bad idea. It should have been a smooth curve.
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As Bitcoin wouldn't survive many years with huge annual inflation rate (because everyone want to dump such money) - the same is valid for zero (or: almost zero) inflation rate (everyone want to hoard such money). That's why I'm very pesimistic regarding: "it's also possible that fees could just spike"...
The root of problem is that we have no interconnector between two separate worlds, digital Bitcoin and the real one.
I know such mechanism is rather not possible in Bitcoin, but in LTE radio network there is something called "open loop and closed loop", to quickly react and regulate radio power parameters in the air channel.
and the similar idea is to swap:
difficulty adjustment towards constant coin supply (i.e. regulating difficulty to keep a block time preconfigured by developer)
for:
block reward adjustment towards constant security behind the network, in terms of purchasing power (i.e. regulating a block reward to keep difficulty configured let say once per year by developers)
i.e.
setting (i.e. keeping) constant security behind the network, in terms of purchasing power (in cross-sectional prices of gold, Big Mac, recent iPhone, etc) - this is an open loop
algorithmic mechanism with negative feedback loop executes that order from developers by constant (smooth) regulation of block reward - this is an closed loop
This way you could have stable, transactional money, with stable security behind, with stable equilibrium between two groups of opposite interests (miners and stakeholders), and with embedded option to smoothly correct the overall direction the network goes (also in case of emergency situations/unexpected events like disruptive hashing hardware appearance, global economic turmoil etc)
Perfect, but even less probable than swapping halvings for Milton Friedman's k-percent rule :)
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I think there's still a strong argument for the halving-associated bull runs driving exponential waves of adoption.
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The argument for miner revenue death-spiral totally ignores the future appreciation of btc value driven by adoption curve. Probably no need to revisit in 100 years, as hyperbitcoinization will have changed everything.
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