mister_monster on Nostr: Well, they're not paying anything; they're not incurringna cost to cover the security ...
Well, they're not paying anything; they're not incurringna cost to cover the security they derive.
Take this idea to an extreme. If *everyone* holds, then the value goes to infinity, right? Well no, because miners stop mining entirely because they won't get paid. There's a curve here, it's not a linear relationship. It's not long term viable, pressing the price up only generates more miner revenue for the same number of coins to a point, and there's a point at which that upward price pressure is outpaced by reduced number of transactions. This is like a cold staking scheme and is not stable or long term viable at all.
Ultimately, the only way to pay for the ongoing cost of security is to have an ongoing cost to holding.
As far as block size... The goal is to secure the network by creating blocks with high difficulty, as well as to process transactions. The smaller the block size, the less transactions you can process. This accelerates what I talked about above since transaction fees double if the block size is half, and as I explain above, constricting supply isn't enough to make sure miners are paid well enough forever. Take this to the extreme too: a block size of 0, in a supply capped coin, will ensure that all miners stop mining forever because there will be no transaction fees. Unstable, not long term viable, similar math and incentives as above.
I don't understand how a bigger block size incentivizes miners to attempt a reorg. If you can explain to me how that would work I'd like that, maybe I'm missing something but I don't see it.
Take this idea to an extreme. If *everyone* holds, then the value goes to infinity, right? Well no, because miners stop mining entirely because they won't get paid. There's a curve here, it's not a linear relationship. It's not long term viable, pressing the price up only generates more miner revenue for the same number of coins to a point, and there's a point at which that upward price pressure is outpaced by reduced number of transactions. This is like a cold staking scheme and is not stable or long term viable at all.
Ultimately, the only way to pay for the ongoing cost of security is to have an ongoing cost to holding.
As far as block size... The goal is to secure the network by creating blocks with high difficulty, as well as to process transactions. The smaller the block size, the less transactions you can process. This accelerates what I talked about above since transaction fees double if the block size is half, and as I explain above, constricting supply isn't enough to make sure miners are paid well enough forever. Take this to the extreme too: a block size of 0, in a supply capped coin, will ensure that all miners stop mining forever because there will be no transaction fees. Unstable, not long term viable, similar math and incentives as above.
I don't understand how a bigger block size incentivizes miners to attempt a reorg. If you can explain to me how that would work I'd like that, maybe I'm missing something but I don't see it.