mister_monster on Nostr: I mean, not any time soon. I did a writeup about this a year ago, I should bookmark ...
I mean, not any time soon.
I did a writeup about this a year ago, I should bookmark my writeups. Basically, you've got a situation where hodlers pay no cost to secure their holdings, but there's a cost to security, and that cost is the total mining reward + transaction fees every block. Right now, it's tenable because of the block reward, so hodlers lose some value to debasement and thus pay to secure their holdings, but ultimately, the only people that pay to secure the network are users.
(Also, keep in mind that the capped supply means we know the ultimate supply of bitcoin, so we can treat those as yet nonexistent block reward coins as existing I'm some currently unused wallet, an therefore as priced in.)
This is a classic example of what's called the free rider problem in game theory.
https://en.m.wikipedia.org/wiki/Free-rider_problem
https://en.m.wikipedia.org/wiki/Tragedy_of_the_commons
So, what you wind up with is ever increasing transaction fees, or a limitation of security, and also you have an incentive of bitcoin users not to spend or move bitcoin, only to hodl, since they can offload the cost onto those that do spend it and move it, and you wind up with a positive feedback loop that ultimately leads to less revenue for miners, subsequently less security, and subsequently a decline in price.
Notice I didn't mention block size once, as while it does factor into the pace at which this happens, ultimately it doesn't factor into this outcome occurring. To be clear, the cause of this problem is entirely a capped supply. You could have 10TB blocks and a capped supply of 20 decillion and this outcome would still be ultimately imminent.
I'm long bitcoin for the foreseeable future, I love bitcoin, but it will happen eventually. I don't know how soon, but incentives determine outcomes and this one is staring us in the face.
I did a writeup about this a year ago, I should bookmark my writeups. Basically, you've got a situation where hodlers pay no cost to secure their holdings, but there's a cost to security, and that cost is the total mining reward + transaction fees every block. Right now, it's tenable because of the block reward, so hodlers lose some value to debasement and thus pay to secure their holdings, but ultimately, the only people that pay to secure the network are users.
(Also, keep in mind that the capped supply means we know the ultimate supply of bitcoin, so we can treat those as yet nonexistent block reward coins as existing I'm some currently unused wallet, an therefore as priced in.)
This is a classic example of what's called the free rider problem in game theory.
https://en.m.wikipedia.org/wiki/Free-rider_problem
https://en.m.wikipedia.org/wiki/Tragedy_of_the_commons
So, what you wind up with is ever increasing transaction fees, or a limitation of security, and also you have an incentive of bitcoin users not to spend or move bitcoin, only to hodl, since they can offload the cost onto those that do spend it and move it, and you wind up with a positive feedback loop that ultimately leads to less revenue for miners, subsequently less security, and subsequently a decline in price.
Notice I didn't mention block size once, as while it does factor into the pace at which this happens, ultimately it doesn't factor into this outcome occurring. To be clear, the cause of this problem is entirely a capped supply. You could have 10TB blocks and a capped supply of 20 decillion and this outcome would still be ultimately imminent.
I'm long bitcoin for the foreseeable future, I love bitcoin, but it will happen eventually. I don't know how soon, but incentives determine outcomes and this one is staring us in the face.