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From: Corey Haddad <corey3@gmail.com>
Date: Wed, 6 Jul 2022 00:28:50 -0400
Message-ID: <CAK_HAC97sfvtkfs=yTt8Z0pi5ZF91n7OcZbu7k4XhdnMJ_PYnA@mail.gmail.com>
To: Giuseppe B <beppeben2030@gmail.com>, 
 Bitcoin Protocol Discussion <bitcoin-dev@lists.linuxfoundation.org>
Content-Type: multipart/alternative; boundary="000000000000945c2a05e31b688b"
Subject: Re: [bitcoin-dev] Bitcoin covenants are inevitable
Precedence: list

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>Bitcoin's finite supply is the main argument for people investing in it,
the whole narrative around bitcoin is based on its finite supply. While it
has its flaws and basically condemns bitcoin to be only used as a store >of
value (and not as a currency), I don't think it's worth questioning it at
this point.
>
>Just my 2 sats.
>
>Giuseppe.

A finite supply alone is not enough to give something value, as it must
also be useful in some way. In the case of Bitcoin, various forms of
cryptographic security must all work - and work together - to make Bitcoin
useful. If the only realistic (fair, efficient & proportionate) way to pay
for Bitcoin's security was by having some inflation scheme that violated
the 21 million cap, then agreeing to break the limit would probably be what
makes sense, and in the economic interest of its users and holders.

There will always be competitive pressures with respect to efficiency, and
both being over-secured and under-secured would be economically inefficient
for a crypto currency, and thereby laving room for a more optimally-secured
competitor to gain ground. Currently there is zero feedback in the Bitcoin
system between what we might think is the optimum amount of security and
what actually exists. There is also zero agreement on how much security
would constitute such an optimum. Figuring out how much security is needed,
or even better, figuring out a way to have a market mechanism to answer
that question, will be an important project.

Another option, if we were to decide we are over-secured in the short term,
would be to soft-fork in a reduction in the current and near-future mining
rewards, by somehow locking the coins in a contract that deprived the miner
of the full reward, and then using that contract to pay the rewards out far
in the future, should at some point we feel the security budget was
insufficient. Anthony Towns presented a form of this concept in greater
detail at a Scaling Bitcoin conference some years ago. While this solution,
if employed, would only work for some finite amount of time, it is possible
that could give additional decades before the accumulated security budget
was exhausted.

Corey

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<div dir=3D"ltr">&gt;Bitcoin&#39;s finite supply is the main argument for p=
eople investing in it, the whole narrative around bitcoin is based on its f=
inite supply. While it has its flaws and basically condemns bitcoin to be o=
nly used as a store &gt;of value (and not as a currency), I don&#39;t think=
 it&#39;s worth questioning it at this point.=C2=A0<div dir=3D"auto">&gt;</=
div><div dir=3D"auto">&gt;Just my 2 sats.=C2=A0</div><div dir=3D"auto" styl=
e=3D"color:rgb(136,136,136)">&gt;</div><div dir=3D"auto" style=3D"color:rgb=
(136,136,136)">&gt;Giuseppe.=C2=A0</div><div dir=3D"auto" style=3D"color:rg=
b(136,136,136)"><br></div><div>A finite=C2=A0supply alone is not enough to =
give something value, as it must also be useful in some way. In the case of=
 Bitcoin, various=C2=A0forms of cryptographic=C2=A0security=C2=A0must all w=
ork - and work together - to make Bitcoin useful. If the only realistic (fa=
ir, efficient &amp; proportionate) way to pay for Bitcoin&#39;s security=C2=
=A0was by having some inflation scheme=C2=A0that violated the 21 million ca=
p, then agreeing to break the limit would probably be what makes sense, and=
 in the economic interest of its users and holders.<br><br>There will alway=
s be competitive=C2=A0pressures with respect to efficiency, and both being =
over-secured and under-secured would be economically inefficient for a cryp=
to currency, and thereby laving room for a more optimally-secured competito=
r to gain ground. Currently there is zero feedback in the Bitcoin system be=
tween what we might think is the optimum amount of security and what actual=
ly exists. There is also zero agreement on how much security would constitu=
te such an optimum. Figuring out how much security is needed, or even bette=
r, figuring out a way to have a market mechanism to answer that question, w=
ill be an important project.<br><br>Another option, if we were to decide we=
 are over-secured in the short term, would be to soft-fork in a reduction i=
n the current and near-future mining rewards, by somehow locking the coins =
in a contract that deprived the miner of the full reward, and then using th=
at contract to pay the rewards out far in the future, should at some point =
we feel the security budget was insufficient. Anthony Towns presented a for=
m of this concept in greater detail at a Scaling Bitcoin conference some ye=
ars ago. While this solution, if employed, would only work for some finite =
amount of time, it is possible that could give additional decades before th=
e accumulated security budget was exhausted.=C2=A0<br></div><div><br></div>=
<div>Corey</div></div>

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