Return-Path: Received: from smtp1.osuosl.org (smtp1.osuosl.org [140.211.166.138]) by lists.linuxfoundation.org (Postfix) with ESMTP id 2A39AC0001 for ; Mon, 24 May 2021 22:03:47 +0000 (UTC) Received: from localhost (localhost [127.0.0.1]) by smtp1.osuosl.org (Postfix) with ESMTP id 10FB683C0A for ; Mon, 24 May 2021 22:03:47 +0000 (UTC) X-Virus-Scanned: amavisd-new at osuosl.org X-Spam-Flag: NO X-Spam-Score: 0.602 X-Spam-Level: X-Spam-Status: No, score=0.602 tagged_above=-999 required=5 tests=[BAYES_50=0.8, DKIM_SIGNED=0.1, DKIM_VALID=-0.1, DKIM_VALID_AU=-0.1, DKIM_VALID_EF=-0.1, FREEMAIL_FROM=0.001, HTML_MESSAGE=0.001, RCVD_IN_DNSWL_NONE=-0.0001, SPF_HELO_NONE=0.001, SPF_PASS=-0.001] autolearn=ham autolearn_force=no Authentication-Results: smtp1.osuosl.org (amavisd-new); dkim=pass (2048-bit key) header.d=gmail.com Received: from smtp1.osuosl.org ([127.0.0.1]) by localhost (smtp1.osuosl.org [127.0.0.1]) (amavisd-new, port 10024) with ESMTP id vGTkEyhkNyiy for ; Mon, 24 May 2021 22:03:44 +0000 (UTC) X-Greylist: whitelisted by SQLgrey-1.8.0 Received: from mail-ot1-x334.google.com (mail-ot1-x334.google.com [IPv6:2607:f8b0:4864:20::334]) by smtp1.osuosl.org (Postfix) with ESMTPS id A60AE83C09 for ; Mon, 24 May 2021 22:03:44 +0000 (UTC) Received: by mail-ot1-x334.google.com with SMTP id v19-20020a0568301413b0290304f00e3d88so26666401otp.4 for ; Mon, 24 May 2021 15:03:44 -0700 (PDT) DKIM-Signature: v=1; a=rsa-sha256; c=relaxed/relaxed; d=gmail.com; s=20161025; h=mime-version:references:in-reply-to:from:date:message-id:subject:to; bh=TDSCg3JnWDxuHfBPx1yj7dOTkHzAwq48uvHRXKBbLXg=; b=KA6engk0u3LRGhlbbZ3qjNS29eUfSxIwlaLjNjgXb238/r26+yzsZBQk8bVS6UGRmr Dctu7yW85msIcN4jXxzKoAxSR63Hnd6ZKyFEdvFs+WKgIy2CA3H5F4r28P+jHY2wzvq9 DV+5+3cSofAkVWJilhzFzOule3YqG3T0xv8k2Jkq162bcXRKBpePlwlondJaMehjAHm8 oq82o8tFmYIXTYWp50x4fwz9hb5/SY55pTqbSljcwgRbdYQk/QlIlFWDu9Vasmf1b03A XYBBvbuSzBO9lJNvauhKCxXBRxjjOJGk/wYtnIs5z05avOYalg7pOsetXIkqisZbjmsN xWfA== X-Google-DKIM-Signature: v=1; a=rsa-sha256; c=relaxed/relaxed; d=1e100.net; s=20161025; h=x-gm-message-state:mime-version:references:in-reply-to:from:date :message-id:subject:to; bh=TDSCg3JnWDxuHfBPx1yj7dOTkHzAwq48uvHRXKBbLXg=; b=VJzqDeEpBMWJrkoWECmbfcxmXCOj9LNZg4tlma3wmaIl2QxBlkd8gl2mi2iZYc3r14 FzRJ0I/XjE9P8HKYcpwsMWgJck7ZTKdfdCG0S2LdUkBd+lAQ6qRWKb+QSojmVDsqwy9E hEIakzVJyvJr0muqEnSg9F1GeO7MQS7i9W4Y/z4K9LFJgh6sHkMuP0auXz/AOS+DFroy ISJ7zstG6in5x26hhuiNg6mzS/iTW31Ou/gBvROQSYe1KU91XMfLhXqm2Zoybtobmp6i K2ookVNLrqnK1apJwwHmG5ZpNyQdN4qSKPAe1kjXoKIraIjrYPNW6IMNZMbMchpi5urS MXDQ== X-Gm-Message-State: AOAM533iNuHHfVTgIJdTR2f/vPef77snu3fLU9EnT6zJvmK1ShON8mE/ bg8fzkoBAAToTeYXWKWhXV/quCa9H/orJZZrzLI= X-Google-Smtp-Source: ABdhPJy3h+NpG5JQvna6tLNS0exQZyJKhVQPvTEBX85xca7sbuqzPW6sUrlHoEVP8FzTIh42noxsT0EL5UF+W0sJllE= X-Received: by 2002:a9d:12ee:: with SMTP id g101mr7824223otg.84.1621893823761; Mon, 24 May 2021 15:03:43 -0700 (PDT) MIME-Version: 1.0 References: In-Reply-To: From: Phuoc Do Date: Mon, 24 May 2021 15:03:32 -0700 Message-ID: To: James Lu , Bitcoin Protocol Discussion Content-Type: multipart/alternative; boundary="0000000000003a912305c31a9517" X-Mailman-Approved-At: Tue, 25 May 2021 08:34:20 +0000 Subject: Re: [bitcoin-dev] Reducing block reward via soft fork X-BeenThere: bitcoin-dev@lists.linuxfoundation.org X-Mailman-Version: 2.1.15 Precedence: list List-Id: Bitcoin Protocol Discussion List-Unsubscribe: , List-Archive: List-Post: List-Help: List-Subscribe: , X-List-Received-Date: Mon, 24 May 2021 22:03:47 -0000 --0000000000003a912305c31a9517 Content-Type: text/plain; charset="UTF-8" I think security and inflation are intertwined aspects of a monetary system [1]. They are both necessary. Many Bitcoin articles discussed energy and security. More energy translates to more security. The other dimension is inflation. Bitcoin block reward is constant and reduced every 4 years. But its price has increased exponentially. The price rise compensates for reduced inflation. I don't think a fee market is enough to sustain the system. Bitcoin, for now, is heading for destruction when inflation stops. As a self-contained system, this happens when the block reward (plus fee) decreases faster than the price rise. The Fed has an inflation target of 2% per year. This is conventional wisdom. The USD M2 money base historically grows at 7% per year [2]. We didn't know why inflation is necessary. I think Bitcoin shows us that inflation and security are related. Inflation ensures there'll be security. Without inflation, the system will collapse. Cutting block rewards will reduce energy spend. But it likely will destroy the system. Instead, we need to ask: 1. How much energy we should spend on mining? 2. How we can use renewable energy? [1] https://bitflate.org/post/2021/05/21/inflation-and-security.html [2] https://ycharts.com/indicators/us_m2_money_supply_yoy On Sun, May 23, 2021 at 1:49 AM James Lu via bitcoin-dev < bitcoin-dev@lists.linuxfoundation.org> wrote: > Background > === > Reducing the block reward reduces the incentive to mine. It reduces the > maximum energy price at which mining is profitable, reducing the energy use. > > Bitcoins have value because they are accepted by full node users, from > individual node operators, to exchanges and custodians like Coinbase. > Anything else and the Bitcoins don't exist and are worthless. Like all > currencies, Bitcoin has value because others recognize that they have value. > > Idea > === > Reduce the block reward by adding fewer coins to the UTXO set per block. > This should be done gradually > > Consensus layer > === > This is a soft fork, because it tightens the > > Some Possible Weaknesses > === > - It will cost less than a nation-state of energy to reverse recent > Bitcoin transactions. > - Some miners may protest and lobby exchanges. > - By pushing mining towards the cheapest energy sources, centralization > increases towards Chinese miners. > - The Bitcoin network may split if consensus is not built before flag day. > > However, given the current political headwinds and widespread public > discussion around Bitcoin's energy use, it may be socially possible to > ask individual users and major exchanges to install a version of Bitcoin > with a reduced block reward. > > Alternatives > === > Instead of outright rejecting transactions (and the blocks that contain > them) that attempt to spend increased block rewards, treat them as no-ops. > _______________________________________________ > bitcoin-dev mailing list > bitcoin-dev@lists.linuxfoundation.org > https://lists.linuxfoundation.org/mailman/listinfo/bitcoin-dev > -- Phuoc Do --0000000000003a912305c31a9517 Content-Type: text/html; charset="UTF-8" Content-Transfer-Encoding: quoted-printable
I think security and inflation are intertwined aspects of = a monetary=C2=A0system [1]. They are both necessary. Many Bitcoin articles = discussed=C2=A0energy and security. More energy translates to more security= . The other dimension is inflation. Bitcoin block reward is constant and re= duced every 4 years. But its price has increased exponentially. The price r= ise compensates for reduced inflation.

I don't think= a fee market is enough to sustain the system.=C2=A0Bitcoin, for now, is he= ading for destruction when inflation stops. As a self-contained system, thi= s happens when the block reward (plus fee) decreases faster than the price = rise. The Fed has an inflation target of 2% per year. This is conventional = wisdom. The USD M2 money base historically grows at 7% per year [2]. We did= n't know why inflation is necessary. I think Bitcoin shows us that infl= ation and security are related. Inflation ensures there'll be security.=

Without inflation, the system will collapse. Cutt= ing block rewards will reduce energy spend. But it likely will destroy the = system. Instead, we need to ask:

1. How much energ= y we should spend on mining?

On Sun, May 23, 2021 at 1:49 AM James Lu via bitcoin= -dev <bitcoin-d= ev@lists.linuxfoundation.org> wrote:
Background
=3D=3D=3D
Reducing the block reward reduces the inc= entive to mine. It reduces the maximum energy price at which mining is prof= itable, reducing the energy use.
<= br>
Bitcoins have value because th= ey are accepted by full node users, from individual node operators, to exch= anges and custodians like Coinbase. Anything else and the Bitcoins don'= t exist and are worthless. Like all currencies, Bitcoin has value because o= thers recognize that they have value.

Idea
=3D=3D=3D
Reduce the block reward by adding fe= wer coins to the UTXO set per block. This should be done gradually

Consensus layer
=3D=3D=3D<= /div>
This is a soft fork, because it ti= ghtens the=C2=A0

Some Possible Weaknesses
=3D=3D=3D
- It= will cost less than a nation-state of energy to reverse recent Bitcoin tra= nsactions.
- Some miners may prote= st and lobby exchanges.
- By p= ushing mining towards the cheapest energy sources, centralization increases= towards Chinese miners.
- The Bit= coin network may split if consensus is not built before flag day.

However, given the current political headwinds and widespread public dis= cussion around Bitcoin's energy use, it may be socially possible to ask individ= ual users and major exchanges to install a version of Bitcoin with a reduce= d block reward.

Alternatives
=3D=3D=3D
Instead of outright rej= ecting transactions (and the blocks that contain them) that attempt to spen= d increased block rewards, treat them as no-ops.
_______________________________________________
bitcoin-dev mailing list
= bitcoin-dev@lists.linuxfoundation.org
https://lists.linuxfoundation.org/mail= man/listinfo/bitcoin-dev


--
Phuoc Do
--0000000000003a912305c31a9517--