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On the Instability of Bitcoin Without the Block Reward [pdf]

cs.princeton.edu

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Re: On the Instability of Bitcoin Without the Block Reward [pdf]

#31

Post by troysk »

Paul-E wrote: post #12

One of the assumptions the authors make in this paper is that miners can turn their hardware on and off quickly, and that they will benefit financially for doing so. Mainly by paying lower electricity bills. It turns out the really big miners don't pay for electricity the same way you or I do. Big miners sign long term contracts for continuous consumption of energy, and don't save any money for turning mining hardwar…

They talk about miner turning off the system just after they have mined a coin as they probability of getting another soon is very low while the cost of running the system same.

Re: On the Instability of Bitcoin Without the Block Reward [pdf]

#32

Post by toomim »

chrisco255 wrote: post #15

Why can't Bitcoin simply transition to proof of stake after mining dries up? Once there are few or no bitcoins left to mine then PoW is a lot of ceremony for very little security gain at that point (and perhaps opens up risks that this paper points out).

It's difficult for the Bitcoin community to find consensus on changes to the consensus rules. We couldn't change a constant from 1MB to 2MB. I think changing PoW entirely is extremely unlikely to happen. It's much easier for the people who believe in PoS to sell their Bitcoin and buy Ethereum instead.

Re: On the Instability of Bitcoin Without the Block Reward [pdf]

#33

Post by cyphertruck »

coliveira wrote: post #17
generalizations wrote: post #13

Earlier quoted context omitted.

> Inflation discourages hoarding. People have incentives to spend. I'd rather we use a coin that people want more of (deflationary), rather than a coin people want less of (inflationary). There's no inherent reason we want there to be incentives to spend, unless you're some central planner trying to keep the populace invested in society.

The whole economy depends on people spending. If everybody starts to hoard currency, economy will implode. That's why deflation is worse than (light) inflation, from an economic standpoint.

The idea that when purchasing power increases people spend absolutely nothing is the basis if this rationalization for inflation, and it isn’t supported by logic or experience.

They actually spend more and more productively, because instead of barely getting by they are able to accumulate capital and start businesses.

Re: On the Instability of Bitcoin Without the Block Reward [pdf]

#35

Post by totalZero »

gvv wrote: post #34
geraldbauer wrote: post #29

Reminder: Instability? Yes, bitcoin is a ponzi and will collapse. Learn how the investment fraud works. [1] [1]: https://github.com/openblockchains/bitcoin-ponzi

Nocoiners said that at every single price and adoption milestone...

You can make money in a Ponzi scheme, too. Just saying.

Re: On the Instability of Bitcoin Without the Block Reward [pdf]

#36

Post by troysk »

cyphertruck wrote: post #25
Paul-E wrote: post #14

Earlier quoted context omitted.

This paper was published when there were big fights going on about whether the block size should be increased. Om camp argued for the status quo, which was causing high transaction fees and long backlogs. The other camp argued for a larger block size, which would reduce or eliminate the transaction backlog. Eliminating the backlog was generally considered a good thing, and the arguments were mostly around the block s…

Not to disagree, but to emphasize that the idea that the only way to increase bitcoin capacity is increasing the block size is in error. You didn't push that idea but others do. Nearly every release of bitcoin over past 8 years has increased capacity or efficiency, often both.

Feels like natural progression as underlying technology (internet speeds and HDD space) improves. So more network traffic can now get synced across more nodes faster.

Re: On the Instability of Bitcoin Without the Block Reward [pdf]

#37

Post by witweb »

elcomet wrote: post #24
xiphias2 wrote: post #3

This is the first interesting paper I see here on HN about Bitcoin. While many people think that Bitcoin's energy usage is too high, I honestly hope that it's high enough to deter a nation state sized attacker. Many Bitcoiners argue that miner rewards shouldn't decrease more, but at the same time it's too late to change the concensus on it.

> I honestly hope that it's high enough to deter a nation state sized attacker. What's the point though? Bitcoin has no real use case apart from speculation.

So people living in countries without a stable currency due to hyperinflation don't count as a real use case? It's sometimes the only way they can secure their capital. I think that we need to think outside of our elitist western bubble more often. Not all people live in a stable democracy with (semi-)stable currencies.

Re: On the Instability of Bitcoin Without the Block Reward [pdf]

#38

Post by generalizations »

cyphertruck wrote: post #33
coliveira wrote: post #17

Earlier quoted context omitted.

The whole economy depends on people spending. If everybody starts to hoard currency, economy will implode. That's why deflation is worse than (light) inflation, from an economic standpoint.

The idea that when purchasing power increases people spend absolutely nothing is the basis if this rationalization for inflation, and it isn’t supported by logic or experience. They actually spend more and more productively, because instead of barely getting by they are able to accumulate capital and start businesses.

Exactly. People can depend on the value they've acquired to remain valuable, which means they can take on greater risk in the future.

Re: On the Instability of Bitcoin Without the Block Reward [pdf]

#39

Post by AaronFriel »

cyphertruck wrote: post #25
Paul-E wrote: post #14

Earlier quoted context omitted.

This paper was published when there were big fights going on about whether the block size should be increased. Om camp argued for the status quo, which was causing high transaction fees and long backlogs. The other camp argued for a larger block size, which would reduce or eliminate the transaction backlog. Eliminating the backlog was generally considered a good thing, and the arguments were mostly around the block s…

Not to disagree, but to emphasize that the idea that the only way to increase bitcoin capacity is increasing the block size is in error. You didn't push that idea but others do. Nearly every release of bitcoin over past 8 years has increased capacity or efficiency, often both.

How many kWh does one transaction consume?

Is that higher or lower than 8 years ago?

Re: On the Instability of Bitcoin Without the Block Reward [pdf]

#40

Post by tromp »

cyphertruck wrote: post #25
Paul-E wrote: post #14

Earlier quoted context omitted.

This paper was published when there were big fights going on about whether the block size should be increased. Om camp argued for the status quo, which was causing high transaction fees and long backlogs. The other camp argued for a larger block size, which would reduce or eliminate the transaction backlog. Eliminating the backlog was generally considered a good thing, and the arguments were mostly around the block s…

Not to disagree, but to emphasize that the idea that the only way to increase bitcoin capacity is increasing the block size is in error. You didn't push that idea but others do. Nearly every release of bitcoin over past 8 years has increased capacity or efficiency, often both.

The point remains that eliminating the backlog of high fee paying transactions would jeopardize mining stability and security in the long term.
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