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Napkin math suggests Bitcoin will perish unless its mining incentives change

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Re: Napkin math suggests Bitcoin will perish unless its mining incentives change

#11

Post by AlexandrB »

> For years, analysts have gone on channels like CNBC calling Bitcoin “digital gold”, and many everyday crypto investors truly believe that.

This has always been silly. You can stick gold in a basement and come back 200 years later to find it completely intact. Redeeming bitcoin depends not only on a functioning software ecosystem (imagine trying to run today's software 200 years from now) but also on the mining community continuing to operate forever.

Bitcoin's primary appeal has always been unregulated, online exchange of value.

Re: Napkin math suggests Bitcoin will perish unless its mining incentives change

#13

Post by spenvo »

glitchc wrote: post #10

A key mistake is to think that mining rewards are measured in coins, whereas they are actually measured in fiat currency. Miners pay their bills in dollars/pounds/euros/etc. To them, the price of a coin matters as much as the mining reward. As Bitcoin becomes scarce to obtain, it's price will skyrocket, offsetting any reduction in mining incentives. It's designed to balance itself. And of course if it becomes a real…

The idea of skyrocketing value of BTC to make up for the "halving" effect is covered in the article, as "Scenario #1".

Re: Napkin math suggests Bitcoin will perish unless its mining incentives change

#15

Post by spenvo »

And, at the one-hour mark, this post got knocked out of the top 10 on HN's front page to the 106th spot on the 4th page, for no stated reason, which has happened before. (Perhaps it's HN's "flame war detector", idk; for me, that usually only knocks a post to Page 2). None of the comments are too negative about the piece. But in any case, this will likely get flagged by enough users, and I get it - people own a lot of this stuff. It's a major looming issue for the space though (Bitcoin dominates all other cryptos). It's another reason a project is in trouble: when you can't have tough and open conversations about it.

Re: Napkin math suggests Bitcoin will perish unless its mining incentives change

#16

Post by OutOfHere »

tantalor wrote: post #6

Nothing new here. This has been known since 2009-ish.

It doesn't negate the legitimacy of the argument in any way. The issue takes time to manifest.

Your comment is essentially the same as shitting on climate change for the reason.

Re: Napkin math suggests Bitcoin will perish unless its mining incentives change

#17

Post by tromp »

superkuh wrote: post #12
tantalor wrote: post #6

Nothing new here. This has been known since 2009-ish.

Yep. Every couple of years "Bitcoin will perish" and then doesn't.

This article explains how Bitcoin will experience severe problems in 20-40 years, not in a "couple of years".

Re: Napkin math suggests Bitcoin will perish unless its mining incentives change

#19

Post by AlexandrB »

glitchc wrote: post #10

A key mistake is to think that mining rewards are measured in coins, whereas they are actually measured in fiat currency. Miners pay their bills in dollars/pounds/euros/etc. To them, the price of a coin matters as much as the mining reward. As Bitcoin becomes scarce to obtain, it's price will skyrocket, offsetting any reduction in mining incentives. It's designed to balance itself. And of course if it becomes a real…

> As Bitcoin becomes scarce to obtain, it's price will skyrocket

This kind of logic always reminds me of the Terra/LUNA fiasco. An economic model that works as long as nothing unexpected happens. For the price of bitcoin to skyrocket, you need a constant stream of new investors willing to buy bitcoin at these inflated prices. What if this just doesn't happen?

Re: Napkin math suggests Bitcoin will perish unless its mining incentives change

#20

Post by tantalor »

OutOfHere wrote: post #16
tantalor wrote: post #6

Nothing new here. This has been known since 2009-ish.

It doesn't negate the legitimacy of the argument in any way. The issue takes time to manifest. Your comment is essentially the same as shitting on climate change for the reason.

I'm not negating the argument at all! I'm saying this is a well-known, fairly popular argument, and it is as old as bitcoin itself.
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