Comte de Sats Germain on Nostr: I don't think the people paying for security have to be the same as the people ...
I don't think the people paying for security have to be the same as the people benefitting from it.... But backing up, thank you for writing all that. I think I understand and have had similar worries.
Actually I think the hodlers, who aren't the active users, are paying for security indirectly. By hodling, they constrict supply, which keeps value high, which keeps the miners happy with what they get paid. If you push the scenario to the opposite extreme, where nobody keeps savings long term and spends their while income as fast as they get it, then you would effectively have in increase in supply of btc, which would bring the value of each sat drastically down. Then you would be in a similar miner death spiral, just from the other direction. This would be the same effect that the "velocity of money " currently has in economic calculations - that is, the bank reserve ratio is the inverse of the multiplier of the absolute number of dollars loaned - so if the reserve ratio is 10%, and a bank makes a loan of $1 million, then the money supply effrctively increases by $10 million. Therefore, not spending btc assists in retaining its value, which is good for mining.
I think the solution is similar to this - just as constricting money supply keeps value up, also constricting block size keeps fees up. If, after the coinbase drops to zero, the miners can't stay in business and it appears that hash rate will fall below a secure threshold, then the fix is to decrease block size. IMO it should never have been increased to begin with.
Does that make sense? Maybe there's something I'm still not seeing. An aside, but I think there's a point where increasing block size becomes genuinely dangerous, if it causes miners to stop mining honestly and instead attempt a reorg. You can always make blocks smaller without danger, but not bigger. I hope we don't see any more of that.
Actually I think the hodlers, who aren't the active users, are paying for security indirectly. By hodling, they constrict supply, which keeps value high, which keeps the miners happy with what they get paid. If you push the scenario to the opposite extreme, where nobody keeps savings long term and spends their while income as fast as they get it, then you would effectively have in increase in supply of btc, which would bring the value of each sat drastically down. Then you would be in a similar miner death spiral, just from the other direction. This would be the same effect that the "velocity of money " currently has in economic calculations - that is, the bank reserve ratio is the inverse of the multiplier of the absolute number of dollars loaned - so if the reserve ratio is 10%, and a bank makes a loan of $1 million, then the money supply effrctively increases by $10 million. Therefore, not spending btc assists in retaining its value, which is good for mining.
I think the solution is similar to this - just as constricting money supply keeps value up, also constricting block size keeps fees up. If, after the coinbase drops to zero, the miners can't stay in business and it appears that hash rate will fall below a secure threshold, then the fix is to decrease block size. IMO it should never have been increased to begin with.
Does that make sense? Maybe there's something I'm still not seeing. An aside, but I think there's a point where increasing block size becomes genuinely dangerous, if it causes miners to stop mining honestly and instead attempt a reorg. You can always make blocks smaller without danger, but not bigger. I hope we don't see any more of that.