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

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

#221

Post by herodoturtle » Thu, Mar 04, 2021, 11:18 AM UTC

michaelscott wrote: post #218

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…

Again I can't really say much about what could happen at this point. History "behaves" too bizarrely, especially over such a long time period, and inflection points are usually completely random and unpredictable (black swans), being only obvious in retrospect. One thing I can be fairly confident won't happen is that BTC will become a medium of exchange. This is because BTC mechanically behaves more like a commodity…

Thanks Michael, appreciate your thoughts.

And I agree. I too doubt BTC will become the medium of exchange it was originally envisaged to be.

As to whether it will retain our confidence as a store of value remains to be seen.

I will continue to follow the heated discussion on HN with much interest. It's great to be able to read the consolidated thoughts of individuals who clearly understand this technology far better than I do.

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

#222

Post by 4AoZqrH2fsk5UB » Thu, Mar 04, 2021, 1:37 PM UTC

ajkdhcb2 wrote: post #60

This is one of the reasons why I am glad that Monero has a tail emission: the block reward never drops to zero, but stays at a fixed amount per block, asymptotically getting closer to 0% inflation per year

Yes. This is yet another reason I think Monero will become an actually usable currency

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

#223

Post by loceng » Thu, Mar 04, 2021, 5:31 PM UTC

xiphias2 wrote: post #91

loceng wrote: post #82

Earlier quoted context omitted.

Someone made a comment the other day stating that a 50%+1 attack is more and more likely as it's becoming only a handful of people doing the mining.

I'm more worried about the concentration of miners in China than the miners themselves. For them it's not worth it to try the attack. But for China it may be worth to do it if too much Bitcoin is concentrated in American people's hands.

I'd rather you switch your language slightly to state that it'd be the CCP who could easily force the concentration of miners in China to do bad actions; afaik the CCP allows mining to occur in China but not for the Chinese to own Bitcoin?

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

#224

Post by cwkoss » Thu, Mar 04, 2021, 7:14 PM UTC

Mordisquitos wrote: post #220

cwkoss wrote: post #184

Earlier quoted context omitted.

Carbon tax carbon emitting energy. Don't tax solar panels, that would be short sighted and regressive.

Of course, I meant applying a carbon (i.e. "carbon-dependent") tax at the point of energy production, not on energy production itself in abstract. I can see how it could give that impression by how I phrased my second paragraph in terms of energy-intensiveness rather than carbon-intensiveness, but my intention was to abstract away which specific source of energy each industry made use of, assuming a unified and homog…

Good points.

I felt the need to be pendantic on that point because I see a lot of lazy accounting around energy emmission harms. It is unfortunately common for people to write about the harms from an amount of energy consumption without considering what type of energy production is actually used.

I've read several articles in the past month that essentially had the lazy incorrect math such as: Activity Foo uses X MWh, X MWh is Y% of total energy production. Burning fuels emits Z tons of CO2 and W amount of other harmful polutants. Therefore Activity Foo is responsible for Y% of Z CO2 and Y% of W pollution.

Becoming a pet peeve of mine.

Bitcoin (~39%) has about double the proportion of green energy usage as global energy consumption (~17%)! If these numbers are accurate, it seems like cryptomining should be some-amount-less concerning than the broad energy economy in terms of greening our infrastructure.

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

#225

Post by antocv » Fri, Mar 05, 2021, 9:21 AM UTC

Kbelicius wrote: post #74

antocv wrote: post #50

Earlier quoted context omitted.

The way to understand this, ask if PoS would have been bitgold released in 2009. As bitcoin wasnt valued in 2009-2011, its value in USD was basically zero. Yet the cost of attacking the PoW even during that time was the cost of electricity which was higher than zero. PoS, if it was released in 2009 instead of PoW, the cost to attack it would have been zero, as the price of bitcoin was. There is a solution to this but…

> There is a solution to this but none of the shitcoins have it implemented, instead chosing to give the creators all the power and majority stake. What is the solution you are thinking about? Interestingly enough, IIRC, the very first PoS coin did not give the creators all the power and majority stake.

I hate the entire cryptospace and all the damn shilling of every shitcoin in every corner of the internet. I hate it with a burning passion, I hate all the shitcoins which overpromise and deliver shitty SQL servers.

If it is good enough you and others will be able to find it, without anyone needing to name-drop or shill it. If it isint easy to find, well it isnt and deserves to die. But please if/when you find it, dont shill it, dont mention it.

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

#226

Post by BelenusMordred » Fri, Mar 05, 2021, 2:50 PM UTC

CJefferson wrote: post #67

BelenusMordred wrote: post #64

Earlier quoted context omitted.

> yet for it's entire existence so far, the block reward has made it more inflationary than all major currencies Why does every HN bitcoin thread have this ridiculously incorrect statement being mindless parroted? The inflation rate of bitcoin is currently 1.8%, this is easily confirmed for anyone willing to put in 10 seconds of research. In comparison the US M1 monetary supply is up over 60% in the last year and the…

I was just considering inflation that people see "on the street". By including M1, aren't you including fractional banking? If that is so, if bitcoin became "standard currency", banks would just fractionally bank bitcoin.

Even if you are using CPI as monetary "inflation", it's still far below the CPI target of every developed economy on Earth.

Do think M1 is the more accurate measure here because the amount of bitcoin in circulation is the equivalent of M1 as defined by everyone: "currency in supply".

https://en.wikipedia.org/wiki/M1_(money_supply_measure)

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

#227

Post by stevenroose » Fri, Mar 05, 2021, 5:10 PM UTC

This paper is entirely based on a false assumption:

> We also assume that miners always have space to include all available transactions.

And that's exactly what the block size debate was about 2 years ago (paper is 4 years old). We did realize that it was crucial for Bitcoin to always have demand for block space, exactly for this reason.

If the authors want to contribute to the space, they should revisit that assumption and try again.

Also, the paper has a clear motive:

> Perhaps instead, designers of new cryptocurrencies must resign themselves to the inevitability of monetary inflation and make the block reward permanent.

Instead of suggesting changes that could be made to Bitcoin to reduce the thread of the scenario they describe, they suggest to discard Bitcoin altogether and move to a cryptocurrency with permanent inflation.

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

#228

Post by BelenusMordred » Sat, Mar 06, 2021, 8:08 AM UTC

jrek wrote: post #109

BelenusMordred wrote: post #64

Earlier quoted context omitted.

> yet for it's entire existence so far, the block reward has made it more inflationary than all major currencies Why does every HN bitcoin thread have this ridiculously incorrect statement being mindless parroted? The inflation rate of bitcoin is currently 1.8%, this is easily confirmed for anyone willing to put in 10 seconds of research. In comparison the US M1 monetary supply is up over 60% in the last year and the…

Growth in money supply =/= inflation. If price stability is what you want then the money supply has to increase as production increases to avoid deflation.

It's certainly the meaning in some contexts. The problem with the word is it is widely used for consumer price inflation. When talking about asset and monetary inflation people still shorten it to simply "inflation"

Growth in money supply is the proper way to compare to different monetary systems like bitcoin and the dollar.

> to avoid deflation

Last I looked nearly every person on Earth wants price deflation in food/electricity/cars/iphones/etc. The onus on you here to show why that is such a bad thing for society?

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

#229

Post by syngrog66 » Sat, Mar 06, 2021, 10:20 PM UTC

dcolkitt wrote: post #165

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…

As a tangent, I wonder if Bitcoin mining could re-ignite the nuclear power industry. Nuclear power plants involve a high upfront capital cost, then produce a long-life of fixed electricity output at near-zero marginal cost. My understanding is that one reason more plants were built in the 60s was because electricity prices were fixed by regulators. That made financial modeling easier, because investors could legibly…

I wrote a bit of fiction recently which portrayed a future where a starship needed to run its own Bitcoin mining cluster (because "reasons") and the ship also happened to use a nuclear power plant. and for "reasons" the mining host hardware was also placed as close to the nuclear reactor as they could get away with (well the electricity generation portions anyway.) all needed for (arbitrary, fanciful) plot reasons, but one of ideas I used to justify it was because the power generation qualities fit the power needs of the crypto miners pretty well. stable load, low cost per watt, theres no wind or geothermal or tide in space, and solar is sometimes too weak and other times entirely blocked (picture situation when ship in planetary orbit, on far side from the star, so light is eclipsed.)

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

#230

Post by rjmunro » Mon, Mar 08, 2021, 9:47 AM UTC

dragonwriter wrote: post #176

moralsupply wrote: post #171

Earlier quoted context omitted.

Cryptocurrency mining is mostly about Bitcoin. Bitcoin has maintained at least 60% market dominance year-over-year since its inception (averaging 75% all time dominance). Ethereum (which can be profitably mined using GPUs) has currently 15% dominance, with most of the other top 15 coins not being PoW (except for Litecoin, Bitcoin Cash and Dogecoin, from which only Bitcoin Cash can be mined either with ASICs or GPUs).…

> Cryptocurrency mining is mostly about Bitcoin. What cryptocurrency mining is mostly about is entirely irrelevant to either the claim that GPUs, and the power thet consume, are used exclusively for gaming or the counterclaim that, on the contrary, significant sources of GPU use outside of gaming exist, including cryptocurrency mining. It doesn't matter if the coins for which GPU mining is viable are a much smaller s…

Also: how many gamers are there compared to how many crypto traders? It's not a meaningful comparison.

You should compare Bitcoin to some aspect of finance that is similar sized, e.g. a single bank with similar transaction volumes, or something like the Bank Of England CHAPS network, which has about half the number of transactions, but 30 times the total transaction value. https://www.bankofengland.co.uk/payment-and-settlement/chaps