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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]

#41

Post by afiori »

witweb wrote: post #37
elcomet wrote: post #24

Earlier quoted context omitted.

> 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.

But for them there are better alternatives to BTC, one being BCH for example

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

#43

Post by tromp »

cyphertruck wrote: post #22
netcruiser wrote: post #5

Sounds like its based on a flawed assumption: "Now, immediately after a block is found, there will be no more transactions in the network to be claimed by a miner making the next block" The fact is there is usually a large backlog of transactions.

The large backlog these days is mostly spam transactions with almost no fees. Bitcoin has increased capacity dramatically in the past decade.

Wrong; there is a large backlog of transactions paying over 50 sat per byte [1], which is over $10 in fees for most transactions.

[1] https://jochen-hoenicke.de/queue/#BTC,24h

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

#44

Post by comex »

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…

Given that we’re talking about less than 10 minutes’ worth of energy, I wonder if a battery might be a viable option.

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

#45

Post by [deleted] »

troysk wrote: post #31
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.

[deleted]

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

#46

Post by retsibsi »

troysk wrote: post #31
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.

I don't think the probability changes, does it? But the block will be less valuable if there are fewer transaction fees to claim.

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

#47

Post by roenxi »

There is a slightly subtle contribution here (hidden deep in the 3rd line of the abstract).

The stability of the blockchain and the equilibrium position amongst the miners might shift spectacularly when the chain shifts from new bitcoin to transaction fees. It doesn't matter if the paper's assumptions are good or bad after that - they showed there is a difference between the two states and that is interesting in itself.

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

#48

Post by CJefferson »

I've been interested in what will happen without the block reward.

One (small) thing which really irritates me about bitcoin is how it is claimed it is "not inflationary", yet for it's entire existence so far, the block reward has made it more inflationary than all major currencies -- it's easy to claim that at some point in the future you will stop inflation, I'll believe it when I see it.

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

#49

Post by [deleted] »

retsibsi wrote: post #46
troysk wrote: post #31

Earlier quoted context omitted.

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.

I don't think the probability changes, does it? But the block will be less valuable if there are fewer transaction fees to claim.

[deleted]

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

#50

Post by antocv »

cyphertruck wrote: post #28
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).

There is no such thing as “Proof of stake” to replace proof of work. Proof if work is a solution where you do not have to trust anyone, as the block is won by the person who finds the right math result, essentially a lottery. Proof if stake is either really proof of work that is less secure and obscured, or more often dimply giving the creators of the coin the power and your trust.... which reverses the entire point…

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 none of the shitcoins have it implemented, instead chosing to give the creators all the power and majority stake.

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