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From: Billy Tetrud <billy.tetrud@gmail.com>
Date: Sat, 20 Aug 2022 10:30:26 -0500
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To: "aliashraf.btc At protonmail" <aliashraf.btc@protonmail.com>, 
 Bitcoin Protocol Discussion <bitcoin-dev@lists.linuxfoundation.org>
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Cc: Peter <dizzle@pointbiz.com>
Subject: Re: [bitcoin-dev] Surprisingly, Tail Emission Is Not Inflationary
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@vjudeu
> Miners can game this system by moving their own coins in 100% fees
transactions, just to produce more coins. You have one million BTC? No
problem, just move them as fees, and you just created 100k BTC out of thin
air, just because you are a wealthy miner.

Hmm, I believe you're right about that. If a miner can make 1 BTC of fees
by honestly mining + 0.1 BTC of inflation, they could instead make 2 BTC by
mining their own transactions with 20 BTC of fees. That does sound very
gameable. I rescind my suggestion.

One could imagine modifications to that suggestion that attempts to make it
more difficult to game directly. For example, if an average sum of
fees/block was calculated over a window (eg 2 weeks, 2 months, etc) and 10%
of that was released in coinbase rewards, you would eliminate the
possibility for individual miners to game the system. However, you would
then have to consider the group of miners as a whole - since they all have
an interest in increasing their revenues, it certainly seems like a
dangerous incentive that could lead to runaway inflation. So perhaps even
extensions of my suggestion are too gameable to be safe.

But my point still stands that tail emission is not a permanent solution.
One permanent solution would be some constant inflation *rate *(eg
0.1%/year). Given that the necessary security is a function of the total
value of the currency, perhaps that would be a reasonable natural way to
scale security as needed.

Again tho, I haven't seen any convincing evidence that any solution like
this will likely be necessary at all. Total collected fees will also scale
up as bitcoin grows, probably quadratically (since the value of the network
grows quadratically). I'm rather more inclined to think collected fees will
get far *too* high - ie substantially higher than needed to pay for
sufficient blockchain security.




On Fri, Aug 19, 2022 at 1:48 PM aliashraf.btc At protonmail via bitcoin-dev
<bitcoin-dev@lists.linuxfoundation.org> wrote:

> Hi Peter, everyone
> This issue has been discussed thoroughly in bitcointalk, general
> discussions are more suited to forums, I believe, still ....
>
> First and foremost, it is more than obvious that bitcoin block subsidy
> algorithm is a total disaster, not just for the zero subsidy security
> consequences, but also for the overly rewarding scheme that favors (few)
> first-runners against (masses of) people who join later, a policy that
> looks to be a cheap marketing trick rather than a decent strategic
> monetary, system design, no matter how natural it is presumed nowadays,
> after being implemented by Bitcoin.
>
> For now, the brilliance of the idea behind Bitcoin and the enthusiasm have
> compensated for its bizzar, upside-down inflation policy, in practice as
> newcomers have been paying the price to lucky first-runners and adopting
> anyway.
> Is it happening for low block subsidy? Is it going to be solved somehow? I
> don't think so.
>
> With subsidy still being the major (like 90%) portion of the block reward,
> there is an equalizer factor pushing equilibrium by paying security costs
> on behalf of current coin owners.Note that every single new bitcoin paid as
> subsidy is actually paid by the rest of the wallets proportional to their
> balance.
> Other than its direct contribution to security, once understood as a
> ballance-based taxing scheme, it is a crucial mechanism for re-distribution
> of wealth because to compensate for their costs, unlike speculators (who
> are among the worst adopters of Bitcoin, and unfortunately the most
> influencers), miners are used to dumping their coins, providing more fair
> opportunities for people to join.
> So, halving and the hard cap, put both adoption and security as risk, It
> is why, unlike  "believers", I'm deeply concerned about a future with low
> block subsidy because it puts both security and adoption in an awkward
> situation.
>
> Additionally, It is not considered an engineering practice by any measure
> to speculate about the security of a system that we abundantly recommend to
> friends, family for joining.
> We need proofs, security proof, ease of adaptation proof, etc.,
> Fantasies are not proofs, having faith in a magical incentive mechanism
> that fixes everything is not an argument, let alone being a proof.
> Incentives are irrelevant, rules, schemes, projects, and so fort, matter.
> There are always incentives in games, but rules are in charge of
> determining the fate.
> Without rules, there is no game, flawed schemes and rules move the game
> behind its equilibrium to fail eventually.
>
> I've not to mention the unfeasibility of tempering Bitcoin's basic
> consensus rules, Bitcoin rules are not subject to change specially when it
> comes to something that is widely considered a basic characteristic, a
> Schelling point, and so forth.
>
> So, it is the paradoxical situation: we are exposed to, on one hand, it is
> a deficiency and on the other hand it is inevitable because is critically
> hard-code to Bitcoin, advertised more than any feature as its identity.
> But it is our job, isn't it? Dealing with the impossible and taking care
> of it, but I think before reaching to that point we have to settle the
> basics.:
>
>
>    1. There is a problem with long term security and adoption
>    consequences.
>    2. It is built deeply to bitcoin consensus rules, and considered a
>    critical
>    3. It is not going to disappear magically, neither it will be
>    addressed by whales, etc.
>    4. The 21M cap, halving, and generally, Bitcoin consensus, is not
>    subject to change.
>
>
> Don't panic, it is not exactly a catch-22 situation. Tip:
> It is always possible to help a system without aggressive intervention,
> either by smart tweaks or by supporting it using other system(s).
>
> Cheers, Ali Ashraf
>
>
>
> ------- Original Message -------
> On Tuesday, August 16th, 2022 at 8:35 PM, Peter via bitcoin-dev <
> bitcoin-dev@lists.linuxfoundation.org> wrote:
>
> Hi Jaroslaw,
>
>
>
> In the Prisoner's Dilemma the prisoners cannot communicate. In Bitcoin
> large holders are able to communicate with each other. Also, prisoners need
> not make an all or nothing decision in Bitcoin. Miners can join and leave
> the network freely over time. You can change your decision based on the
> decision of others.
>
>
> The Bitcoin design is such that security is volatile but the issuance of
> blocks is timely and evened out to a 10 minutes average even after the
> reward is exhausted.
>
>
> The existing incentive that miners earn money for including transactions
> is enough to motivate human nature. Transaction initiators have an
> incentive to mine and run full nodes for personal interest.
>
>
> >Noone will waste his renewable energy on unprofitable Antminer while
> he/she can sell this energy for the market price.
>
>
> The law in most jurisdictions prevents the resale of spare electricity
> unless an expensive license is obtained (and in most cases no license is
> available as the government maintains a monopoly). Mining with waste
> electricity is reducing losses. Another incentive to motivate human nature.
>
>
> Bitcoin holders can be enfranchised into any new system. So, no need for
> bike shedding the original design which is a Schelling Point.
>
>
> Regards
>
> Peter Kroll
>
> pointbiz/ BTCCuracao
>
>
>
> _______________________________________________
> bitcoin-dev mailing list
> bitcoin-dev@lists.linuxfoundation.org
> https://lists.linuxfoundation.org/mailman/listinfo/bitcoin-dev
>

--000000000000ec584805e6ade542
Content-Type: text/html; charset="UTF-8"
Content-Transfer-Encoding: quoted-printable

<div dir=3D"ltr"><div>@vjudeu<br></div><div>&gt; Miners can game this syste=
m by moving their own coins in 100% fees transactions, just to produce more=
 coins. You have one million BTC? No problem, just move them as fees, and y=
ou just created 100k BTC out of thin air, just because you are a wealthy mi=
ner.</div><div><br></div><div>Hmm, I believe you&#39;re right about that. I=
f a miner can make 1 BTC of fees by honestly=C2=A0mining + 0.1 BTC of infla=
tion, they could instead make 2 BTC by mining their own transactions with 2=
0 BTC of fees. That does sound very gameable. I rescind=C2=A0my suggestion.=
=C2=A0</div><div><br></div><div>One could imagine modifications to that sug=
gestion that attempts to make it more difficult to game directly. For examp=
le, if an average sum of fees/block was calculated over a window (eg 2 week=
s, 2 months, etc) and 10% of that was released in coinbase rewards, you wou=
ld eliminate the possibility for individual miners to game the system. Howe=
ver, you would then have to consider=C2=A0the group of miners as a whole - =
since they all have an interest in increasing their revenues, it certainly =
seems like a dangerous incentive that could lead to runaway inflation. So p=
erhaps even extensions of my suggestion are too gameable to be safe.</div><=
div><br></div><div>But my point still stands that tail emission is not a pe=
rmanent solution. One permanent solution would be some constant inflation <=
b>rate </b>(eg 0.1%/year). Given that the necessary security is a function =
of the total value of the currency, perhaps that would be a reasonable natu=
ral way to scale security as needed.=C2=A0</div><div><br></div><div>Again t=
ho, I haven&#39;t seen any convincing evidence that any solution like this =
will likely be necessary at all. Total collected fees will also scale up as=
 bitcoin grows, probably=C2=A0quadratically (since the value of the network=
 grows quadratically). I&#39;m rather more inclined to think collected fees=
 will get far *too* high - ie substantially higher than needed to pay for s=
ufficient blockchain security.</div><div><br></div><div><br></div><div><br>=
</div></div><br><div class=3D"gmail_quote"><div dir=3D"ltr" class=3D"gmail_=
attr">On Fri, Aug 19, 2022 at 1:48 PM aliashraf.btc At protonmail via bitco=
in-dev &lt;<a href=3D"mailto:bitcoin-dev@lists.linuxfoundation.org" target=
=3D"_blank">bitcoin-dev@lists.linuxfoundation.org</a>&gt; wrote:<br></div><=
blockquote class=3D"gmail_quote" style=3D"margin:0px 0px 0px 0.8ex;border-l=
eft:1px solid rgb(204,204,204);padding-left:1ex"><div style=3D"font-family:=
Arial;font-size:14px;color:rgb(0,0,0)">Hi Peter, everyone</div><div style=
=3D"font-family:Arial;font-size:14px;color:rgb(0,0,0)">This issue has been =
discussed thoroughly in bitcointalk, general discussions are more suited to=
 forums, I believe, still .... <br></div><div style=3D"font-family:Arial;fo=
nt-size:14px;color:rgb(0,0,0)"><br></div><div style=3D"font-family:Arial;fo=
nt-size:14px;color:rgb(0,0,0)">First and foremost, it is more than obvious =
that bitcoin block subsidy algorithm is a total disaster, not just for the =
zero subsidy security consequences, but also for the overly rewarding schem=
e that favors (few) first-runners against (masses of) people who join later=
, a policy that looks to be a cheap marketing trick rather than a decent st=
rategic monetary, system design, no matter how natural it is presumed nowad=
ays, after being implemented by Bitcoin.<br></div><br><div style=3D"font-fa=
mily:Arial;font-size:14px;color:rgb(0,0,0)">For now, the brilliance of the =
idea behind Bitcoin and the enthusiasm have compensated for its bizzar, ups=
ide-down inflation policy, in practice as newcomers have been paying the pr=
ice to lucky first-runners and adopting anyway.</div><div style=3D"font-fam=
ily:Arial;font-size:14px;color:rgb(0,0,0)">Is it happening for low block su=
bsidy? Is it going to be solved somehow? I don&#39;t think so.</div><div st=
yle=3D"font-family:Arial;font-size:14px;color:rgb(0,0,0)"><br></div><div st=
yle=3D"font-family:Arial;font-size:14px;color:rgb(0,0,0)">With subsidy stil=
l being the major (like 90%) portion of the block reward, there is an equal=
izer factor pushing equilibrium by paying security costs on behalf of curre=
nt coin owners.Note that every single new bitcoin paid as subsidy is actual=
ly paid by the rest of the wallets proportional to their balance.</div><div=
 style=3D"font-family:Arial;font-size:14px;color:rgb(0,0,0)">Other than its=
 direct contribution to security, once understood as a ballance-based taxin=
g scheme, it is a crucial mechanism for re-distribution of wealth because t=
o compensate for their costs, unlike speculators (who are among the worst a=
dopters of Bitcoin, and unfortunately the most influencers), miners are use=
d to dumping their coins, providing more fair opportunities for people to j=
oin. <br></div><div style=3D"font-family:Arial;font-size:14px;color:rgb(0,0=
,0)">So, halving and the hard cap, put both adoption and security as risk, =
It is why, unlike=C2=A0 &quot;believers&quot;, I&#39;m deeply concerned abo=
ut a future with low block subsidy because it puts both security and adopti=
on in an awkward situation.</div><div style=3D"font-family:Arial;font-size:=
14px;color:rgb(0,0,0)"><br></div><div style=3D"font-family:Arial;font-size:=
14px;color:rgb(0,0,0)">Additionally, It is not considered an engineering pr=
actice by any measure to speculate about the security of a system that we a=
bundantly recommend to friends, family for joining.</div><div style=3D"font=
-family:Arial;font-size:14px;color:rgb(0,0,0)">We need proofs, security pro=
of, ease of adaptation proof, etc., <br></div><div style=3D"font-family:Ari=
al;font-size:14px;color:rgb(0,0,0)">Fantasies are not proofs, having faith =
in a magical incentive mechanism that fixes everything is not an argument, =
let alone being a proof.</div><div style=3D"font-family:Arial;font-size:14p=
x;color:rgb(0,0,0)">Incentives are irrelevant, rules, schemes, projects, an=
d so fort, matter. There are always incentives in games, but rules are in c=
harge of determining the fate. <br></div><div style=3D"font-family:Arial;fo=
nt-size:14px;color:rgb(0,0,0)">Without rules, there is no game, flawed sche=
mes and rules move the game behind its equilibrium to fail eventually. <br>=
</div><div style=3D"font-family:Arial;font-size:14px;color:rgb(0,0,0)"><br>=
</div><div style=3D"font-family:Arial;font-size:14px;color:rgb(0,0,0)">I&#3=
9;ve not to mention the unfeasibility of tempering Bitcoin&#39;s basic cons=
ensus rules, Bitcoin rules are not subject to change specially when it come=
s to something that is widely considered a basic characteristic, a Schellin=
g point, and so forth.</div><div style=3D"font-family:Arial;font-size:14px;=
color:rgb(0,0,0)">=C2=A0<br></div><div style=3D"font-family:Arial;font-size=
:14px;color:rgb(0,0,0)">So, it is the paradoxical situation: we are exposed=
 to, on one hand, it is a deficiency and on the other hand it is inevitable=
 because is critically hard-code to Bitcoin, advertised more than any featu=
re as its identity. <br></div><div style=3D"font-family:Arial;font-size:14p=
x;color:rgb(0,0,0)">But it is our job, isn&#39;t it? Dealing with the impos=
sible and taking care of it, but I think before reaching to that point we h=
ave to settle the basics.:</div><div style=3D"font-family:Arial;font-size:1=
4px;color:rgb(0,0,0)"><br></div><div style=3D"font-family:Arial;font-size:1=
4px;color:rgb(0,0,0)"><div><ol><li><span>There is a problem with long term =
security and adoption consequences.<br></span></li><li><span>It is built de=
eply to bitcoin consensus rules, and considered a critical <br></span></li>=
<li><span>It is not going to disappear magically, neither it will be addres=
sed by whales, etc.<br></span></li><li><span>The 21M cap, halving, and gene=
rally, Bitcoin consensus, is not subject to change.<br></span></li></ol></d=
iv></div><div style=3D"font-family:Arial;font-size:14px;color:rgb(0,0,0)"><=
br></div><div style=3D"font-family:Arial;font-size:14px;color:rgb(0,0,0)">D=
on&#39;t panic, it is not exactly a catch-22 situation. Tip:</div><div styl=
e=3D"font-family:Arial;font-size:14px;color:rgb(0,0,0)">It is always possib=
le to help a system without aggressive intervention, either by smart tweaks=
 or by supporting it using other system(s).</div><div style=3D"font-family:=
Arial;font-size:14px;color:rgb(0,0,0)"><br></div><div style=3D"font-family:=
Arial;font-size:14px;color:rgb(0,0,0)">Cheers, Ali Ashraf<br></div><div sty=
le=3D"font-family:Arial;font-size:14px;color:rgb(0,0,0)"><br></div><div><br=
></div><br><div>
        ------- Original Message -------<br>
        On Tuesday, August 16th, 2022 at 8:35 PM, Peter via bitcoin-dev &lt=
;<a href=3D"mailto:bitcoin-dev@lists.linuxfoundation.org" target=3D"_blank"=
>bitcoin-dev@lists.linuxfoundation.org</a>&gt; wrote:<br><br>
        <blockquote type=3D"cite">
            Hi Jaroslaw,</blockquote><div><br></div><blockquote type=3D"cit=
e"><div><br></div>In the Prisoner&#39;s Dilemma the prisoners cannot commun=
icate. In Bitcoin large holders are able to communicate with each other. Al=
so, prisoners need not make an all or nothing decision in Bitcoin. Miners c=
an join and leave the network freely over time. You can change your decisio=
n based on the decision of others.<div><br></div><div><br></div>The Bitcoin=
 design is such that security is volatile but the issuance of blocks is tim=
ely and evened out to a 10 minutes average even after the reward is exhaust=
ed. <div><br></div><div><br></div>The existing incentive that miners earn m=
oney for including transactions is enough to motivate human nature. Transac=
tion initiators have an incentive to mine and run full nodes for personal i=
nterest. <div><br></div><div><br></div>&gt;Noone will waste his renewable e=
nergy on unprofitable Antminer while he/she can sell this energy for the ma=
rket price.<div><br></div><div><br></div>The law in most jurisdictions prev=
ents the resale of spare electricity unless an expensive license is obtaine=
d (and in most cases no license is available as the government maintains a =
monopoly). Mining with waste electricity is reducing losses. Another incent=
ive to motivate human nature. <div><br></div><div><br></div>Bitcoin holders=
 can be enfranchised into any new system. So, no need for bike shedding the=
 original design which is a Schelling Point. <div><br></div><div><br></div>=
Regards <div><br></div>Peter Kroll <div><br></div>pointbiz/ BTCCuracao <div=
><br></div><div><br></div>
        </blockquote><br>
    </div>_______________________________________________<br>
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rel=3D"noreferrer" target=3D"_blank">https://lists.linuxfoundation.org/mail=
man/listinfo/bitcoin-dev</a><br>
</blockquote></div>

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