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From: vjudeu@gazeta.pl
To: Billy Tetrud <billy.tetrud@gmail.com>,
 Bitcoin Protocol Discussion <bitcoin-dev@lists.linuxfoundation.org>, ,
 "jk_14@op.pl" <jk_14@op.pl>, ,
 Bitcoin Protocol Discussion <bitcoin-dev@lists.linuxfoundation.org>
Date: Fri, 19 Aug 2022 07:34:25 +0200
Message-Id: <73904836-123affd52a139f11587a4971b0df5f07@pmq6v.m5r2.onet>
Subject: Re: [bitcoin-dev] Surprisingly, Tail Emission Is Not Inflationary
Precedence: list

> If we actually wanted to solve the potential problem of not-enough-fees t=
o upkeep mining security, there are less temporary ways to solve that. For =
example, if fees end up not being able to support sufficient mining, we cou=
ld add emission based on a constant fraction of fees in the block. For exam=
ple, every block could emit new bitcoin amounting to 10% of the fees collec=
ted in that block. This would tie coinbase rewards to the real world (since=
 the fee market is tied to the real economy) and ensure higher block revenu=
e indefinitely - ie not just for another 50 years.

Miners can game this system by moving their own coins in 100% fees transact=
ions, just to produce more coins. You have one million BTC? No problem, jus=
t move them as fees, and you just created 100k BTC out of thin air, just be=
cause you are a wealthy miner. And even if that amount will be stolen, when=
 some other miner will reorg your block, then still, miners will keep creat=
ing coins by moving them as fees, and the strongest miner will get the whol=
e pot. And guess what: 100 blocks later you can reuse newly created 100k BT=
C to make another 10k BTC, so it will exponentially explode as (amountOfCoi=
ns*(1+0.1))^n function. And guess what: (1.1)^8 is 2.14358881. That means, =
after eight moves, you can double your coins, if you are a wealthy miner. A=
nd you can start with smaller amounts, to play it safe, but eventually, thi=
s system will degrade into "coin doubler after 800 blocks" or something sim=
ilar.


On 2022-08-18 18:45:43 user Billy Tetrud via bitcoin-dev <bitcoin-dev@lists=
.linuxfoundation.org> wrote:
While constant tail emission does in fact converge to 0 inflation over time=
 (which bitcoin's halvings do as well mind you), tail emission does *not* s=
olve the potential problem of mining rewards, it only delays it. A tail emi=
ssion of 200,000 btc/year (~1% of the=C2=A0current supply) would be equival=
ent to halvings every ~50 years rather than every 4 years. Were we to imple=
ment this kind of thing right after the last non-" destructive" halving, it=
 would buy us 46 years of extra time. Nothing more, nothing less.


While its mildly interesting to know that tail emission converges to a stab=
le point, while no inflation implies monetary deflation at the rate of loss=
, this feels very likely to be an insignificant problem. I think 1% loss ra=
te per year is an absurdly high estimate these days, and the loss rate is l=
ikely to decrease as methods of storing bitcoin mature. Imagine bitcoin was=
 worth $1 trillion (not so hard, since it was not too long ago), then try i=
magining people losing $10 billion of bitcoin every year. Highly unlikely I=
MO. A rate of loss of 0.01%/year might be more realistic for a near-future =
mature bitcoin. That's not going to be enough to make a significant differe=
nce=C2=A0even over 100s of years.=C2=A0


If we actually wanted to solve the potential problem of not-enough-fees to =
upkeep mining security, there are less temporary ways to solve that. For ex=
ample, if fees end up not being able to support sufficient mining, we could=
 add emission based on a constant fraction of fees in the block. For exampl=
e, every block could emit new bitcoin amounting to 10% of the fees collecte=
d in that block. This would tie coinbase rewards to the real world (since t=
he fee market is tied to the real economy) and ensure higher block revenue =
indefinitely - ie not just for another=C2=A050 years.=C2=A0


But its also worth saying that blockchain security (which mining revenue co=
rrelates with) does *not* need to increase indefinitely. There is some amou=
nt of security (and therefore some amount of mining revenue) that is suffic=
ient, beyond which additional security is simply unnecessary, unwarranted, =
and wasteful (you wouldn't buy a $1000 safe to store $1000 of valuables). D=
o we, as the bitcoin community, have some good idea how much security we ne=
ed? Do we have some idea how costly a 51% attack must be where we can be co=
mfortable it will never happen? I'm curious to hear what people think about=
 that. Because without having some kind of estimates of what "enough securi=
ty" is, there's absolutely no way of evaluating whether or not its likely t=
hat bitcoin fees alone will be able to sustain enough security.=C2=A0


On Wed, Aug 17, 2022 at 9:31 AM Jaroslaw via bitcoin-dev <bitcoin-dev@lists=
.linuxfoundation.org> wrote:

On one scale you puts the Trust to the large stakeholders (why we avoid ple=
nty of small stakeholders, btw),
and on the other side I put game theory and well defined Prisoner's Dilemma.

Again: large stakeholders WILL NOT incentivised to mine, they will have the=
 hundreds excuses why not to switch-on Antminers back.
That's how it simply works.=C2=A0 Bitcoin would fail miserably if Satoshi w=
as based his concept mainly on existence of idealists.

If we will observe lack of hashrate recovery four years after some halving =
and still unprepared like today
- means the trust in large stakeholders was a very costly mistake.


Superiority of Proof of Work against Proof of Stake has been discussed enou=
gh either
The overall conclusion with what I fully agree=C2=A0 is: swapping PoW to Po=
S - would be a degradation.
You can stop talking about degradation to proof of stake, but just: degrada=
tion.

Degradation of Bitcoin, due to human greed.

Now you mine and you have an INSTANT gratification.
Then you will mine and it will cost you real money, but simple switch - and=
 you have a DELAYED, maybe some day in the future, maybe only a tiny - puni=
shment.
And The Punishment Won't Be Tiny.


"If the pain after hitting the hand with a hammer would appear after a mont=
h - people would notoriously walk with swollen fingers"
100% (^2)

Regards
Jaroslaw


W dniu 2022-08-17 13:10:38 u=C5=BCytkownik Erik Aronesty <erik@q32.com> nap=
isa=C5=82:

> you can stop talking about=C2=A0 the "security of the system" as meaningf=
ul
> this has been discussed enough
> if fees are not sufficient, clearance times increase and large stakeholde=
rs are incentivised to mine=C2=A0
> in the best case, fees are sufficient
> in the worst case, it degrades to proof of stake
> i'm sure you can see how that's fine either=C2=A0way


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