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authorJK <jk_14@op.pl>2023-11-05 18:25:47 +0100
committerbitcoindev <bitcoindev@gnusha.org>2023-11-05 17:36:08 +0000
commita830b3cd0c84878d95d1a1db1900d35cad54ef41 (patch)
treead85975c8dbc03d84a06c3144e67969618433dd8
parentf16a84acc77e85224373c27c6c7379feec07a550 (diff)
downloadpi-bitcoindev-a830b3cd0c84878d95d1a1db1900d35cad54ef41.tar.gz
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Re: [bitcoin-dev] ossification and misaligned incentive concerns
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+Message-ID: <8443b179-2d24-4e77-9ff6-c5f51af545aa@op.pl>
+Date: Sun, 5 Nov 2023 18:25:47 +0100
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+To: Erik Aronesty <erik@q32.com>,
+ Bitcoin Protocol Discussion <bitcoin-dev@lists.linuxfoundation.org>
+References: <CAJowKgJXxS3L=pQR=jhSXBgdDR9k5mwPyKhKkuFESw5_qOgdrQ@mail.gmail.com>
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+From: JK <jk_14@op.pl>
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+Subject: Re: [bitcoin-dev] ossification and misaligned incentive concerns
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+
+Ok, instead of (maybe too general) term "network security," - I may
+change it into a more precise term then:
+"security of Store-of-Value"
+
+Of course, your private keys are private and your note is fully
+validating...
+
+...but: miners provide security of Store-of-Value property. Miners
+simply ensure keeping intact the purchasing power of Bitcoins stored on
+your private keys. And it's really difficult to dispute this simple fact.
+
+"Contact with Europeans in the 19th century first provided the Yapese at
+Palau with iron tools, that made the cutting and shaping of the stones
+*** much easier ***. Not much later, the Yapese made deals with
+Europeans to use their ships to transport the stones back to Yap. These
+arrangements enabled the manufacture of much larger and heavier rai
+stones, up to 4 meters in diameter, as well of a larger number of them.
+However, these "modern" stones were *** less valuable *** than more
+ancient ones"
+https://en.wikipedia.org/wiki/Rai_stones#Manufacturing_after_European_contact
+
+much easier "mining" of rai stones/Bitcoins => less valuable rai
+stones/Bitcoins
+
+And as we can see - it's not the matter of belief or disbelief.
+I really hope this simple example is ultimately enough to put an end to
+the narrative that miners do not provide security of Bitcoin - if they
+do provide the security of one of most important Bitcoin's property.
+
+
+
+W dniu 05.11.2023 o 15:59, Erik Aronesty pisze:
+> I don't believe the narrative that miners provide network security
+>
+> they provide double spend insurance
+>
+> and that's it
+>
+> so that limits the size of the transaction and the number of
+> confirmations that are required before that transaction is cleared
+>
+> But it doesn't provide security for the rest of the network.  My private
+> keys are private and my note is fully validating  ..  and there's
+> nothing miners can do about that
+>
+> let's ditch that narrative please
+>
+>
+>
+> On Sun, Nov 5, 2023, 9:40 AM JK <jk_14@op.pl <mailto:jk_14@op.pl>> wrote:
+>
+>
+> I'm worried even more about something else, but still fits into the
+> same
+> topic category.
+>
+>
+> A tax in the form of a direct tax is less acceptable to people than a
+> hidden tax. This is human nature, as the saying goes, "What the eye
+> doesn't see, the heart doesn't grieve over." A high direct tax
+> (e.g., on
+> a one-time transaction) is much more irritating than a tax of the same
+> amount but hidden (especially when it affects all cash holders equally,
+> as in the case of inflation).
+>
+> There is no reason to believe that in any alternative financial system,
+> it will be different ("This time is different." No, it is not.)
+>
+> The analogy is clear: a transaction tax is on-chain fee, an inflation
+> tax is the block reward. And just in case: miners are only able to
+> collect payment for providing network security in an amount equal to
+> the
+> sum collected in both of these taxes, and no single satoshi more (the
+> principle that "There's no such thing as a free lunch" applies).
+>
+> Now, a little thought experiment:
+> Imagine a system that tries to maintain a constant level of difficulty
+> and reacts flexibly to changes in difficulty, by modulating the block
+> reward level accordingly (using negative feedback).
+>
+> It is known that the system will oscillate around a certain level of
+> the
+> block reward value (around a certain level of inflation) that provides
+> the desired level of network security.
+>
+> Furthermore, Earth is a closed system with finite resources, making it
+> hard to imagine a situation where Bitcoin is responsible for e.g. 95%
+> of global energy consumption (while complaints already arise at 0.1%).
+>
+> In other words, the level of network security is de facto limited from
+> the top, whether we like it or not.
+>
+> And for a naturally limited and still acceptable level of network
+> security (vide: "Change the code, not the climate") - there is a
+> corresponding level of inflation.
+>
+>
+> To sum this up, the most important conclusion to remember is:
+>
+> For a natural level of network security, there is a natural level of
+> inflation.
+>
+>
+>
+> I'll add a very relevant comment I know from the internet:
+>
+> "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."
+> https://stacker.news/items/291420 <https://stacker.news/items/291420>
+>
+>
+> There is growing awareness of the lack of a free market between active
+> and passive participants in Bitcoin and growing awareness of the
+> inevitability of the problem that will arise in the future as a result.
+> And there is slowly growing acceptance of well-thought-out proposals to
+> fix this situation.
+> The free market is more important than finite supply.
+>
+>
+> Regards
+> Jaroslaw
+>
+>
+> W dniu 03.11.2023 o 19:24, Erik Aronesty via bitcoin-dev pisze:
+> > currently, there are providers of anonymity services, scaling
+> services,
+> > custody, and other services layered on top of bitcoin using
+> trust-based
+> > and federated models.
+> >
+> > as bitcoin becomes more popular, these service providers have
+> > increasingly had a louder "voice" in development and maintenance
+> of the
+> > protocol
+> >
+> > holders generally want these features
+> >
+> > but service providers have an incentive to maintain a "moat" around
+> > their services
+> >
+> > in summary, making privacy, scaling and vaulting "hard" for regular
+> > users, keeping it off-chain and federated...  is now incentivised
+> among
+> > a vocal, but highly technical, minority
+> >
+> > is anyone else worried about this?
+> >
+> > _______________________________________________
+> > bitcoin-dev mailing list
+> > bitcoin-dev@lists.linuxfoundation.org
+> <mailto:bitcoin-dev@lists.linuxfoundation.org>
+> > https://lists.linuxfoundation.org/mailman/listinfo/bitcoin-dev
+> <https://lists.linuxfoundation.org/mailman/listinfo/bitcoin-dev>
+>
+