On the Instability of Bitcoin Without the Block Reward [pdf] • Hacker News Board

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

#131

Post by mumblemumble » Wed, Mar 03, 2021, 3:27 PM UTC

michaelscott wrote: post #86

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…

A much bigger assumption is that this will even be necessary, considering the last BTC mined will be in 2140. With such a long time horizon any prediction is basically fanciful guesswork; at that time miners might have all moved to renewables after they become cheap enough, we may have new forms of energy generation which make supply both super easy and cost negligible, or Earth may have entered a post-apocalyptic st…

The last BTC mined will be 2140, but the decay is exponential. The reward will halve in about 3 years, and it is likely to halve again 4 years after that, and so on.

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

#132

Post by jariel » Wed, Mar 03, 2021, 3:35 PM UTC

uberswe wrote: post #98

herodoturtle wrote: post #88

Earlier quoted context omitted.

I read this comment with interest, thanks for sharing. Makes good sense to me. If I may ask, do you think the distribution of bitcoin will be somewhat equitable as we approach 2140? And do you you think it will actually become a medium of exchange as originally hoped? Or will it remain a store of wealth only (as things currently seem to indicate)? And if it indeed remains only a store of wealth, will said wealth be d…

It's impossible to predict the future. If everyone holds bitcoin as a store of value then the value should drop as it's not being used for anything one would think. I believe the best outcome is that people start using bitcoin for every day purchases and the hope is that by 2140 the price is relatively stable. Most likely there will be many large holders as there are with real money. However, someone could maybe do a…

" bitcoin for every day purchases and the hope is that by 2140 the price is relatively stable."

This is fantastically impossible.

It will about as stable as any other commodity plus the additional swings due to public stampedes one way or another, and the fact that there is no 'underlying value' to anchor the price (like Oil).

Feasibly, if exchange rates are razor thin (unlikely) then it might be possible buy milk and bread with BTC simply by doing the conversion on point, but that of course requires someone to do some 'investing math / intuition' every time they buy a stick of gum.

It can't be a functional currency, at least as it's designed.

And the notion that it consumes gigantic amounts of energy for no net value gained should have everyone up in arms.

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

#133

Post by uncletammy » Wed, Mar 03, 2021, 3:37 PM UTC

tromp wrote: post #40

cyphertruck wrote: post #25

Earlier quoted context omitted.

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.

I think this is depends on how large the network has scaled at the time the block reward dies. If BTC is doing 100x visa levels, each transaction fee can have a tiny fee and mining would still be viable.

That being said, I don't BTC has any intention of scaling to that degree (or at all really). The BTC devs seem much more concerned with building second layer products like lightning network. All these products actually reduce the number of on-chain transactions and by extension, miner revenue.

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

#134

Post by [deleted] » Wed, Mar 03, 2021, 3:45 PM UTC

uberswe wrote: post #98

herodoturtle wrote: post #88

Earlier quoted context omitted.

I read this comment with interest, thanks for sharing. Makes good sense to me. If I may ask, do you think the distribution of bitcoin will be somewhat equitable as we approach 2140? And do you you think it will actually become a medium of exchange as originally hoped? Or will it remain a store of wealth only (as things currently seem to indicate)? And if it indeed remains only a store of wealth, will said wealth be d…

It's impossible to predict the future. If everyone holds bitcoin as a store of value then the value should drop as it's not being used for anything one would think. I believe the best outcome is that people start using bitcoin for every day purchases and the hope is that by 2140 the price is relatively stable. Most likely there will be many large holders as there are with real money. However, someone could maybe do a…

[deleted]

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

#135

Post by rmah » Wed, Mar 03, 2021, 3:45 PM UTC

herodoturtle wrote: post #88

michaelscott wrote: post #86

Earlier quoted context omitted.

A much bigger assumption is that this will even be necessary, considering the last BTC mined will be in 2140. With such a long time horizon any prediction is basically fanciful guesswork; at that time miners might have all moved to renewables after they become cheap enough, we may have new forms of energy generation which make supply both super easy and cost negligible, or Earth may have entered a post-apocalyptic st…

I read this comment with interest, thanks for sharing. Makes good sense to me. If I may ask, do you think the distribution of bitcoin will be somewhat equitable as we approach 2140? And do you you think it will actually become a medium of exchange as originally hoped? Or will it remain a store of wealth only (as things currently seem to indicate)? And if it indeed remains only a store of wealth, will said wealth be d…

The wealth distribution of bitcoin is even worse than the wealth distribution of society as a whole. Further, I suspect that this would be the typical state for any finite/limited asset. IMO, things like bitcoin (and gold) as a primary wealth store are how you create stratified societies with entrenched elites and banking orgs with more money/power than nation states. Not that bitcoin could ever happen dominate, but it's certainly not egalitarian in any sense.

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

#136

Post by zie » Wed, Mar 03, 2021, 3:49 PM UTC

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.

What would a nation state level attack look like? If they took over the network, it wouldn't really give them anything useful. If they took all the bitcoins, the value would plummet rapidly towards zero, unless they were willing to prop it up with their own currency.

Easier to just tax the crap out of BTC. i.e. any BTC mining done in this country owes us 80% of their BTC mining rewards.. etc.

If China did that, and they are currently doing some 60+% of the mining... it would change the incentives for mining BTC in China drastically, but China would make some sweet cash for a while, and eventually effectively ban BTC in China.

Rinse repeat in other countries, if they decide to hate on BTC.

Though really, I don't see any country wanting to do that right now. They are having too much fun watching who is transacting on BTC thinking they are hiding their transactions from the govt(which they aren't).

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

#137

Post by uncletammy » Wed, Mar 03, 2021, 3:54 PM UTC

jariel wrote: post #132

uberswe wrote: post #98

Earlier quoted context omitted.

It's impossible to predict the future. If everyone holds bitcoin as a store of value then the value should drop as it's not being used for anything one would think. I believe the best outcome is that people start using bitcoin for every day purchases and the hope is that by 2140 the price is relatively stable. Most likely there will be many large holders as there are with real money. However, someone could maybe do a…

" bitcoin for every day purchases and the hope is that by 2140 the price is relatively stable." This is fantastically impossible. It will about as stable as any other commodity plus the additional swings due to public stampedes one way or another, and the fact that there is no 'underlying value' to anchor the price (like Oil). Feasibly, if exchange rates are razor thin (unlikely) then it might be possible buy milk an…

> It can't be a functional currency, at least as it's designed.

Citation needed

> And the notion that it consumes gigantic amounts of energy for no net value gained should have everyone up in arms.

For what it's worth, bitcoin aims to deprecate every single brick-and-morter bank as well as all the armored trucks driving paper currency to and from them.

When you start to add up all of the energy that would be saved if bitcoin succeeds, the energy costs associated with mining start looking quite a bit smaller.

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

#138

Post by dmichulke » Wed, Mar 03, 2021, 3:55 PM UTC

rmah wrote: post #135

herodoturtle wrote: post #88

Earlier quoted context omitted.

I read this comment with interest, thanks for sharing. Makes good sense to me. If I may ask, do you think the distribution of bitcoin will be somewhat equitable as we approach 2140? And do you you think it will actually become a medium of exchange as originally hoped? Or will it remain a store of wealth only (as things currently seem to indicate)? And if it indeed remains only a store of wealth, will said wealth be d…

The wealth distribution of bitcoin is even worse than the wealth distribution of society as a whole. Further, I suspect that this would be the typical state for any finite/limited asset. IMO, things like bitcoin (and gold) as a primary wealth store are how you create stratified societies with entrenched elites and banking orgs with more money/power than nation states. Not that bitcoin could ever happen dominate, but…

Can you give an example of an egalitarian currency or store of value?

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

#139

Post by herodoturtle » Wed, Mar 03, 2021, 3:59 PM UTC

phroobster wrote: post #110

herodoturtle wrote: post #88

Earlier quoted context omitted.

I read this comment with interest, thanks for sharing. Makes good sense to me. If I may ask, do you think the distribution of bitcoin will be somewhat equitable as we approach 2140? And do you you think it will actually become a medium of exchange as originally hoped? Or will it remain a store of wealth only (as things currently seem to indicate)? And if it indeed remains only a store of wealth, will said wealth be d…

>do you think the distribution of bitcoin will be somewhat equitable as we approach 2140 I don’t see why the distribution of anything would be “equitable”, outside of a communist utopia/dystopia. These days that word is mostly used by people exploiting the empathy of others to gain power for themselves.

I see what you're saying. Forgive my choice of wording. Perhaps "equitable" wasn't the correct choice.

I more meant whether it will become a currency of the people. Or a store of wealth for the average person.

I'm looking at this through an African lens. Bitcoin showed a lot of promise for cheap and reliable remittance payments and one day a fully fledged currency for the masses. Gave us Africans lots of hope in many ways.

These days I worry it is increasingly growing more difficult to acquire. It's no longer destined to benefit the people.

I don't mean to imply that everyone deserves an equal share. I hope I'm making sense. I guess I'm more wondering about its overall accessibility long term.

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

#140

Post by jariel » Wed, Mar 03, 2021, 4:02 PM UTC

uncletammy wrote: post #137

jariel wrote: post #132

Earlier quoted context omitted.

" bitcoin for every day purchases and the hope is that by 2140 the price is relatively stable." This is fantastically impossible. It will about as stable as any other commodity plus the additional swings due to public stampedes one way or another, and the fact that there is no 'underlying value' to anchor the price (like Oil). Feasibly, if exchange rates are razor thin (unlikely) then it might be possible buy milk an…

> It can't be a functional currency, at least as it's designed. Citation needed > And the notion that it consumes gigantic amounts of energy for no net value gained should have everyone up in arms. For what it's worth, bitcoin aims to deprecate every single brick-and-morter bank as well as all the armored trucks driving paper currency to and from them. When you start to add up all of the energy that would be saved if…

"Citation needed"

I literally just explained it to you.

The price of BTC has always been highly unstable. There is absolutely no evidence it will ever be stable, to the contrary in fact, all evidence points to the fact that it will remain unstable.

Every single commodity or currency extant to an economy is unstable relative to the currency of that economy. The only thing 'stable' in terms of USD are things closely tied to the managed USD.

Just the mere fact that it's highly unstable - all other things notwithstanding - make it impossible to be a currency.

"For what it's worth, bitcoin aims to deprecate every single brick-and-morter bank as well as all the armored trucks driving paper currency to and from them."

It's really bizarre that anyone would believe this.

Starting with the fact that 'digitization of currency' is already well under way and so there are no 'truck rolls' in the future.

But of course, the implication that banks only provide a 'place to store' money is completely false. Financial Services are an entire industry. Lending, transactions, authorizations, contracts, accounting, risk management, asset allocation, it's a gigantic industry.

But it's moot, BTC will be the same in 20 years that it is one, something to talk about.