Date: Fri, 8 Jul 2022 08:06:14 +1000
From: Anthony Towns <aj@erisian.com.au>
To: Peter Todd <pete@petertodd.org>,
 Bitcoin Protocol Discussion <bitcoin-dev@lists.linuxfoundation.org>
Message-ID: <20220707220614.GA20899@erisian.com.au>
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 <CAHTn92wR+D=2FLAc7vhhm4kNT6NwDfyKdRj32=E9H3UJ4QcE+Q@mail.gmail.com>
 <Ysbp2QclWW7NzfrS@petertodd.org>
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Cc: John Carvalho <john@synonym.to>
Subject: Re: [bitcoin-dev] Bitcoin covenants are inevitable
Precedence: list

On Thu, Jul 07, 2022 at 10:12:41AM -0400, Peter Todd via bitcoin-dev wrote:
> We should not imbue real technology with magical qualities.

That's much more fun if you invert it, and take it as a mission
statement. Advance technology sufficiently!

> The fact of the matter is that the present amount of security is about 1.=
7% of
> the total coin supply/year, and Bitcoin seems to be working fine. 1.7% is=
 also
> already an amount low enough that it's much smaller than economic volatil=
ity.
>=20
> Obviously 0% is too small.
>=20
> There's zero reason to stress about finding an "optimal" amount. An amoun=
t low
> enough to be easily affordable, but non-zero, is fine. 1% would be fine; =
0.5%
> would probably be fine; 0.1% would probably be fine.

For comparison, 0.1% of 21M BTC per annum is 0.4 BTC per block, which
is about 50sat/vb if blocks are 800kvB on average. Doing that purely
with fees seems within the ballpark of feasibility to me.

50sat/vb for a 200vb tx (roughly the size of a 2-in, 2-out p2wpkh/p2tr
tx) is $2 at $20k/BTC, $10 at $100k/BTC, $100 at $1M/BTC etc.

If the current block reward of ~1.7% pa of 19M at a price of $20k funds
the current level of mining activity, then you'd expect a similar level
of mining activity as today with reward at 0.1% pa of 21M at a price
of ~$310k.

Going by the halving schedule, the block subsidy alone will remain above
0.1% of supply until we hit the 0.39 BTC/block regime, in 2036, at which
point it drops to ~0.0986% annualised. (I guess you could extend that by
four years if you're willing to assume more than 1.5% of bitcoin supply
has been permanently lost)

Cheers,
aj