Return-Path: Received: from smtp3.osuosl.org (smtp3.osuosl.org [IPv6:2605:bc80:3010::136]) by lists.linuxfoundation.org (Postfix) with ESMTP id CE04EC002D for ; Tue, 28 Jun 2022 16:23:55 +0000 (UTC) Received: from localhost (localhost [127.0.0.1]) by smtp3.osuosl.org (Postfix) with ESMTP id A7D0A61102 for ; Tue, 28 Jun 2022 16:23:53 +0000 (UTC) DKIM-Filter: OpenDKIM Filter v2.11.0 smtp3.osuosl.org A7D0A61102 Authentication-Results: smtp3.osuosl.org; dkim=pass (2048-bit key) header.d=gmail.com header.i=@gmail.com header.a=rsa-sha256 header.s=20210112 header.b=AMa72Q78 X-Virus-Scanned: amavisd-new at osuosl.org X-Spam-Flag: NO X-Spam-Score: -1.848 X-Spam-Level: X-Spam-Status: No, score=-1.848 tagged_above=-999 required=5 tests=[BAYES_00=-1.9, DKIM_SIGNED=0.1, DKIM_VALID=-0.1, DKIM_VALID_AU=-0.1, DKIM_VALID_EF=-0.1, FREEMAIL_ENVFROM_END_DIGIT=0.25, 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 Received: from smtp3.osuosl.org ([127.0.0.1]) by localhost (smtp3.osuosl.org [127.0.0.1]) (amavisd-new, port 10024) with ESMTP id CojoJf1-uh5v for ; Tue, 28 Jun 2022 16:23:52 +0000 (UTC) X-Greylist: whitelisted by SQLgrey-1.8.0 DKIM-Filter: OpenDKIM Filter v2.11.0 smtp3.osuosl.org 3C0AE605AF Received: from mail-vs1-xe2c.google.com (mail-vs1-xe2c.google.com [IPv6:2607:f8b0:4864:20::e2c]) by smtp3.osuosl.org (Postfix) with ESMTPS id 3C0AE605AF for ; Tue, 28 Jun 2022 16:23:52 +0000 (UTC) Received: by mail-vs1-xe2c.google.com with SMTP id d187so4739519vsd.10 for ; Tue, 28 Jun 2022 09:23:52 -0700 (PDT) DKIM-Signature: v=1; a=rsa-sha256; c=relaxed/relaxed; d=gmail.com; s=20210112; h=mime-version:references:in-reply-to:from:date:message-id:subject:to; bh=cQkWsCT5n4eO0J++18Znj0g+9Tc2Aac3o1vXYmRlXkg=; b=AMa72Q78ZQbiKouRLzdLDs5DpWbIP+qEj9iLwtvaWv2wGjPOQwyALOrU+zLkGDd9b0 pVqH759KK5AK+Eq38goVhSij6msJaKLiGGFasAoKlsqRiqwFmnyewJI1zCnPYfMO302r J4QjgwYy4/k81l1Ux9Dmalkoz8aYxfez+ducGBwSLhSIGC2fD6C1Dn/LftAadae9Uy2y xXc3qUFop8Xmz2SFDVwp+DHHeM2kOJCZIh2Y10UKRhQgC1SLMLwYlqZgrJghffF+pSZr PIaL9jDBp4+NpQFoFyNo/CCN7vyTUOEcEPD5nh35rQ+oI+Gh18Rk2eD1vC+GK4ToEbn0 6oUg== X-Google-DKIM-Signature: v=1; a=rsa-sha256; c=relaxed/relaxed; d=1e100.net; s=20210112; h=x-gm-message-state:mime-version:references:in-reply-to:from:date :message-id:subject:to; bh=cQkWsCT5n4eO0J++18Znj0g+9Tc2Aac3o1vXYmRlXkg=; b=c8akBNUVtj7eoLB0pybo3/o9/qYjTkSpXLsc35qiVKqFHsEhUpfcQh8HRm95CJPKMz N+7TJo5Ar+JzfcAoUSnAINsKTd40tHLOT1MdKGf+6U4d5hpBAlAUY9/YY+HZ8R33C1Op SrrsFQsV2W5JhmlPFOOhBPEFsaeSjj3xb8MAuNip/WDE9i6ltDJ2gzOhh85Sh1Zj3XLj R0rA2C77mAwWEbWHhNlElLpqFTKWW5p46Oiz3pZ+JhYFKZ4c9TeUBVVUjjZWrLDVnxsH pJDrllG5SQKbSKixgHKjkzjfJ9beFnrY7OMyGzbq4JUXzMFERS00noTDtm9nvJbs9C24 bMRg== X-Gm-Message-State: AJIora/JXPGyXGZBAA5oJKq9xvyXRIDkEOjlh7PjqOjYYDkNo6vfu76z F4q4oq7lL+BlKmZr+KgtFij1iHzFCuS5cte5xeUvsdq5 X-Google-Smtp-Source: AGRyM1tEydgTVQnCGwecycWuiqlJDC5NVXAdCklubwrsDmYeVQvB3qLGrNSYK+PreFIgsyry2IbWoHW6Df+1ffN9S1I= X-Received: by 2002:a67:67c4:0:b0:349:d230:9039 with SMTP id b187-20020a6767c4000000b00349d2309039mr2164466vsc.70.1656433430904; Tue, 28 Jun 2022 09:23:50 -0700 (PDT) MIME-Version: 1.0 References: In-Reply-To: From: Alex Lee Date: Tue, 28 Jun 2022 12:23:40 -0400 Message-ID: To: Billy Tetrud , Bitcoin Protocol Discussion Content-Type: multipart/alternative; boundary="0000000000003e45b605e28476c0" X-Mailman-Approved-At: Tue, 28 Jun 2022 16:43:32 +0000 Subject: Re: [bitcoin-dev] Bitcoin covenants are inevitable 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: Tue, 28 Jun 2022 16:23:55 -0000 --0000000000003e45b605e28476c0 Content-Type: text/plain; charset="UTF-8" On Tue, Jun 28, 2022 at 4:43 AM Billy Tetrud via bitcoin-dev < bitcoin-dev@lists.linuxfoundation.org> wrote: > @Eric > > People who transact are realizing the benefit of money - the avoidance > of barter costs. > > I'm very confident you're incorrect that holders don't receive any benefit > and you're certainly not correct that every spend is receiving the same > benefit. As I'm sure you're aware, one of the primary components of a > currency's value and purpose is as a store of value. Storing value happens > while you're holding it, not while you're spending it. Consider the > following two scenarios: one person holds onto 10 bitcoin for 10 years and > then spends those 10 bitcoins in some way in 2 transactions. Another person > spends 4 bitcoins to buy something, then sells it for 6 bitcoins, and then > buys something else for that 6 bitcoins and then never acquires any bitcoin > for 10 years. > > Both people spent 10 bitcoins over 2 transactions. Over that 10 year > period, only one of those people utilized bitcoin's utility as a store of > value. Who benefited more from their use of bitcoin? > > The person who obtained greater economic utility from their two transactions. > > Those who never transact, never realize any benefit. > > While that's true, its not relevant and basically a red herring. You need > to compare those who transact often and rarely hold, to those who hold a > lot but rarely transact. Its not helpful to consider those who throw their > bitcoin into a bottomless pit and never retrieve them. > There are legitimate uses for burning bitcoin, speaking of bottomless pits. I would avoid confusing velocity metrics with utility, as these aren't the same thing. > > On an idealistic level, I agree with Keagan that it would make sense to > have "a balance of fees to that effect". I think doing that would be > technically/economically optimal. However, I think there is an enormous > benefit to having a cultural aversion to monetary inflation and the > consequences of convincing the bitcoin community that inflation is ok could > have unintended negative consequences (not to mention how difficult > convincing the community would be in the first place). There's also the > economic distortion that inflation causes that has a negative effect which > should also be considered. The idea of decaying utxo value is interesting > to consider, but it would not solve the economic distortion that > monetary inflation causes, because that distortion is a result of monetary > devaluation (which decaying utxos would be a form of). Then again, maybe in > this case the distortion of inflation would actually be a correction - > correcting for the externality of benefit received by holders. I'm > stream-of-consciousnessing a bit, but anyways, I suspect its not worth the > trouble to perfect the distribution of bitcoin blockchain security costs to > include holders. Tho, if I were to go back in time and influence how > bitcoin was designed, I might advocate for it. > > @Peter > > demurrage and inflation have identical economic properties. > > The distortion of incentives is identical, however there is also the > effect it has on a currency's property as a useful unit of account. > Decaying utxos would mean that it would contribute substantially less to > market prices needing to change. I suspect this effect would be bordering > on negligible tho. > > On Thu, Jun 23, 2022 at 2:17 PM Peter Todd via bitcoin-dev < > bitcoin-dev@lists.linuxfoundation.org> wrote: > >> On Tue, Jun 21, 2022 at 01:00:07PM -0600, Keagan McClelland via >> bitcoin-dev wrote: >> > > The PoW security of Bitcoin benefits all Bitcoin users, proportional >> to >> > the >> > value of BTC they hold; if Bitcoin blocks aren't reliably created the >> value >> > of >> > *all* BTC goes down. It doesn't make sense for the entire cost of that >> > security >> > to be paid for on a per-tx basis. And there's a high chance paying for >> it >> > on a >> > per-tx basis won't work anyway due to lack of consistent demand. >> > >> > FWIW I prefer the demurrage route. Having something with finite supply >> as a >> > means of measuring economic activity is unprecedented and I believe >> deeply >> > important. I'm sympathetic to the argument that the security of the >> chain >> > should not be solely the responsibility of transactors. We realize the >> > value of money on receipt, hold *and* spend and it would be appropriate >> for >> > there to be a balance of fees to that effect. While inflation may be >> > simpler to implement (just chop off the last few halvings), I think it >> > would be superior (on the assumption that such a hodl tax was >> necessary) to >> > keep the supply fixed and have people's utxo balances decay, at least at >> > the level of the UX. >> >> Demurrage makes protocols like Lightning much more complex, and isn't >> compatible with existing implementations. While demurrage could in theory >> be >> implemented in a soft-fork by forcing txs to contain an output with the >> demurrage-taxed amount, spending to a pool of future mining fees, I really >> don't think it's practical to actually do that. >> >> Anyway, demurrage and inflation have identical economic properties. >> They're >> both a tax on savings. The only difference is the way that tax is >> implemented. >> >> -- >> https://petertodd.org 'peter'[:-1]@petertodd.org >> _______________________________________________ >> bitcoin-dev mailing list >> bitcoin-dev@lists.linuxfoundation.org >> https://lists.linuxfoundation.org/mailman/listinfo/bitcoin-dev >> > _______________________________________________ > bitcoin-dev mailing list > bitcoin-dev@lists.linuxfoundation.org > https://lists.linuxfoundation.org/mailman/listinfo/bitcoin-dev > --0000000000003e45b605e28476c0 Content-Type: text/html; charset="UTF-8" Content-Transfer-Encoding: quoted-printable


=
On Tue, Jun 28, 2022 at 4:43 AM Billy= Tetrud via bitcoin-dev <bitcoin-dev@lists.linuxfoundation.org> wrote:
@Eric<= br>
>=C2=A0 People who transact are realizing the benefit of money - the avoidance of b= arter costs.=C2=A0

I'm very confident you're inc= orrect that=C2=A0holders=C2=A0don't receive any benefit and you're = certainly not correct that=C2=A0every=C2=A0spend is receiving the same bene= fit. As I'm sure you're aware, one of the primary components of a c= urrency's value and purpose is as a store of=C2=A0value. Storing value = happens while you're holding it, not while you're spending it. Cons= ider the following two scenarios: one person holds onto 10 bitcoin for 10 y= ears and then spends those 10 bitcoins in=C2=A0some way in 2 transactions. = Another person spends 4 bitcoins to buy something, then sells it for 6 bitc= oins, and then buys something else for that 6 bitcoins and then never acqui= res any bitcoin for 10 years.=C2=A0

Both people sp= ent 10 bitcoins over 2 transactions. Over that 10 year period, only one of = those people utilized bitcoin's utility as a store of value. Who benefi= ted more from their use of bitcoin?=C2=A0


The person who obtained greater economic utility = from their two transactions.
=C2=A0
> Those w= ho never transact, never realize any benefit.

Whil= e that's true, its not relevant and basically a red herring. You need t= o compare those who transact often and rarely hold, to those who hold a lot= but rarely transact. Its=C2=A0not helpful to consider those who throw thei= r bitcoin into a bottomless pit and never retrieve them.

There are legitimate uses for burning bitcoin, sp= eaking of bottomless pits. I would avoid confusing velocity metrics with ut= ility, as these aren't the same thing.
=C2=A0

On an idealistic level, I agree with Keagan that it would make sense = to have "a balance of fees to that effect". I think doing that wo= uld be technically/economically optimal. However, I think there is an enorm= ous benefit to having a cultural aversion to monetary inflation and the con= sequences of convincing the bitcoin community that inflation is ok could ha= ve unintended negative consequences (not to mention how difficult convincin= g the community would be in the first place). There's also the economic= distortion that inflation causes that has a negative effect which should a= lso be considered. The idea of decaying utxo value is interesting to consid= er, but it would not solve the economic distortion that monetary=C2=A0infla= tion causes,=C2=A0because that=C2=A0distortion is a result of monetary deva= luation (which decaying=C2=A0utxos would be a form of). Then again, maybe i= n this case the distortion of inflation would actually be a correction - co= rrecting for the externality of benefit received by holders. I'm stream= -of-consciousnessing=C2=A0a bit, but anyways, I suspect its not worth the t= rouble to perfect the distribution of bitcoin blockchain security costs to = include holders. Tho, if I were to go back in time and influence how bitcoi= n was designed, I might advocate for it.

@Peter
> demurrage and inflation have identical economic properties= .=C2=A0

The distortion of incentives is identical,= however there is also the effect it has on a currency's property as a = useful unit of account. Decaying utxos would mean that it would contribute = substantially less to market prices needing to change. I suspect this effec= t would be bordering on negligible tho.=C2=A0

On Thu, Jun 23, 2022 at = 2:17 PM Peter Todd via bitcoin-dev <bitcoin-dev@lists.linuxfoundation.or= g> wrote:
On Tue, Jun 21, 2022 at 01:00:07PM -0600, Keagan McClelland via bitcoin-de= v wrote:
> > The PoW security of Bitcoin benefits all Bitcoin users, proportio= nal to
> the
> value of BTC they hold; if Bitcoin blocks aren't reliably created = the value
> of
> *all* BTC goes down. It doesn't make sense for the entire cost of = that
> security
> to be paid for on a per-tx basis. And there's a high chance paying= for it
> on a
> per-tx basis won't work anyway due to lack of consistent demand. >
> FWIW I prefer the demurrage route. Having something with finite supply= as a
> means of measuring economic activity is unprecedented and I believe de= eply
> important. I'm sympathetic to the argument that the security of th= e chain
> should not be solely the responsibility of transactors. We realize the=
> value of money on receipt, hold *and* spend and it would be appropriat= e for
> there to be a balance of fees to that effect. While inflation may be > simpler to implement (just chop off the last few halvings), I think it=
> would be superior (on the assumption that such a hodl tax was necessar= y) to
> keep the supply fixed and have people's utxo balances decay, at le= ast at
> the level of the UX.

Demurrage makes protocols like Lightning much more complex, and isn't compatible with existing implementations. While demurrage could in theory b= e
implemented in a soft-fork by forcing txs to contain an output with the
demurrage-taxed amount, spending to a pool of future mining fees, I really<= br> don't think it's practical to actually do that.

Anyway, demurrage and inflation have identical economic properties. They= 9;re
both a tax on savings. The only difference is the way that tax is implement= ed.

--
http= s://petertodd.org 'peter'[:-1]@petertodd.org
_______________________________________________
bitcoin-dev mailing list
= bitcoin-dev@lists.linuxfoundation.org
https://lists.linuxfoundation.org/mail= man/listinfo/bitcoin-dev
_______________________________________________
bitcoin-dev mailing list
= bitcoin-dev@lists.linuxfoundation.org
https://lists.linuxfoundation.org/mail= man/listinfo/bitcoin-dev
--0000000000003e45b605e28476c0--