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author | Anthony Towns <aj@erisian.com.au> | 2022-07-11 12:32:47 +1000 |
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committer | bitcoindev <bitcoindev@gnusha.org> | 2022-07-11 02:32:59 +0000 |
commit | fbe0d1a03ad8da147b0b3ce13907a2f69ed92d3e (patch) | |
tree | f6ee0d2d1f3df175582ecda1b051f2a0775861f3 | |
parent | 3e7c6fa1a5a645445613c45265a9d454f10c6db4 (diff) | |
download | pi-bitcoindev-fbe0d1a03ad8da147b0b3ce13907a2f69ed92d3e.tar.gz pi-bitcoindev-fbe0d1a03ad8da147b0b3ce13907a2f69ed92d3e.zip |
Re: [bitcoin-dev] Surprisingly, Tail Emission Is Not Inflationary
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diff --git a/d6/a0145c7b326ea54b766575e002e700a837496d b/d6/a0145c7b326ea54b766575e002e700a837496d new file mode 100644 index 000000000..bea44fa31 --- /dev/null +++ b/d6/a0145c7b326ea54b766575e002e700a837496d @@ -0,0 +1,139 @@ +Return-Path: <aj@erisian.com.au> +Received: from smtp3.osuosl.org (smtp3.osuosl.org [IPv6:2605:bc80:3010::136]) + by lists.linuxfoundation.org (Postfix) with ESMTP id 1BF99C002D + for <bitcoin-dev@lists.linuxfoundation.org>; + Mon, 11 Jul 2022 02:32:59 +0000 (UTC) +Received: from localhost (localhost [127.0.0.1]) + by smtp3.osuosl.org (Postfix) with ESMTP id DBBC760E95 + for <bitcoin-dev@lists.linuxfoundation.org>; + Mon, 11 Jul 2022 02:32:58 +0000 (UTC) +DKIM-Filter: OpenDKIM Filter v2.11.0 smtp3.osuosl.org DBBC760E95 +X-Virus-Scanned: amavisd-new at osuosl.org +X-Spam-Flag: NO +X-Spam-Score: 3.299 +X-Spam-Level: *** +X-Spam-Status: No, score=3.299 tagged_above=-999 required=5 + tests=[BAYES_50=0.8, LOTS_OF_MONEY=0.001, MONEY_NOHTML=2.499, + SPF_HELO_PASS=-0.001, SPF_PASS=-0.001, UNPARSEABLE_RELAY=0.001] + autolearn=no autolearn_force=no +Received: from smtp3.osuosl.org ([127.0.0.1]) + by localhost (smtp3.osuosl.org [127.0.0.1]) (amavisd-new, port 10024) + with ESMTP id Sn-V7rgFCMlY + for <bitcoin-dev@lists.linuxfoundation.org>; + Mon, 11 Jul 2022 02:32:57 +0000 (UTC) +X-Greylist: from auto-whitelisted by SQLgrey-1.8.0 +DKIM-Filter: OpenDKIM Filter v2.11.0 smtp3.osuosl.org 6E2BD60E94 +Received: from azure.erisian.com.au (azure.erisian.com.au [172.104.61.193]) + by smtp3.osuosl.org (Postfix) with ESMTPS id 6E2BD60E94 + for <bitcoin-dev@lists.linuxfoundation.org>; + Mon, 11 Jul 2022 02:32:57 +0000 (UTC) +Received: from aj@azure.erisian.com.au (helo=sapphire.erisian.com.au) + by azure.erisian.com.au with esmtpsa (Exim 4.92 #3 (Debian)) + id 1oAjEC-00047c-8l; Mon, 11 Jul 2022 12:32:54 +1000 +Received: by sapphire.erisian.com.au (sSMTP sendmail emulation); + Mon, 11 Jul 2022 12:32:47 +1000 +Date: Mon, 11 Jul 2022 12:32:47 +1000 +From: Anthony Towns <aj@erisian.com.au> +To: Peter Todd <pete@petertodd.org>, + Bitcoin Protocol Discussion <bitcoin-dev@lists.linuxfoundation.org> +Message-ID: <20220711023247.GA21856@erisian.com.au> +References: <Ysl4t9K8lfxRSsNM@petertodd.org> +MIME-Version: 1.0 +Content-Type: text/plain; charset=us-ascii +Content-Disposition: inline +In-Reply-To: <Ysl4t9K8lfxRSsNM@petertodd.org> +User-Agent: Mutt/1.10.1 (2018-07-13) +X-Spam-Score-int: -18 +X-Spam-Bar: - +Subject: Re: [bitcoin-dev] Surprisingly, Tail Emission Is Not Inflationary +X-BeenThere: bitcoin-dev@lists.linuxfoundation.org +X-Mailman-Version: 2.1.15 +Precedence: list +List-Id: Bitcoin Protocol Discussion <bitcoin-dev.lists.linuxfoundation.org> +List-Unsubscribe: <https://lists.linuxfoundation.org/mailman/options/bitcoin-dev>, + <mailto:bitcoin-dev-request@lists.linuxfoundation.org?subject=unsubscribe> +List-Archive: <http://lists.linuxfoundation.org/pipermail/bitcoin-dev/> +List-Post: <mailto:bitcoin-dev@lists.linuxfoundation.org> +List-Help: <mailto:bitcoin-dev-request@lists.linuxfoundation.org?subject=help> +List-Subscribe: <https://lists.linuxfoundation.org/mailman/listinfo/bitcoin-dev>, + <mailto:bitcoin-dev-request@lists.linuxfoundation.org?subject=subscribe> +X-List-Received-Date: Mon, 11 Jul 2022 02:32:59 -0000 + +On Sat, Jul 09, 2022 at 08:46:47AM -0400, Peter Todd via bitcoin-dev wrote: +> title: "Surprisingly, Tail Emission Is Not Inflationary" + +> Of course, this isn't realistic as coins are constantly being lost due to +> deaths, forgotten passphrases, boating accidents, etc. These losses are +> independent: + +This isn't necessarily true: if the losses are due to a common cause, +then they'll be heavily correlated rather than independent; for example +losses could be caused by a bug in a popular wallet/exchange software +that sends funds to invalid addresses, or by a war or natural disaster +that damages key storage hardware. They're also not independent over +time -- people improve their key storage habits over time; eg switching +to less buggy wallets/exchanges, validating addresses before using them, +using distributed multisig to prevent a localised disaster from being +catastrophic. + +> the *rate* of coin loss at time $$t$$ is +> proportional to the total supply *at that moment* in time. + +This is the key assumption that produces the claimed result. + +If you're losing a constant fraction, x (Peter's \lambda), of Bitcoins +each year, then as soon as the supply increases enough that the constant +reward, k, corresponds to the constant fraction, ie k = x*N(t), then +you've hit an equilibrium. (Likewise if you're losing more than you're +increasing -- you just need to wait until N(t) decreases enough that you +reach the same equilibrium point) You don't really need any fancy maths. + +But that assumption doesn't need to be true; coins could primarily be +lost in "black swan" events (due to bugs, wars or disasters) rather +than at a predictable rate -- with actions taken thereafter such that +the same event repeating is no longer the same level of catastrophe, +but instead another new black swan event is required to maintain the same +loss rate. If that's the case, then the rate at which funds are lost will +vary chaotically, leading to "inflationary" periods in between events, +and comparatively strong deflationary shocks when these events occur. + +Alternatively, losses could be at a predictable rate that's entirely +different to the one Peter assumes. + +One alternative predictable rate that seems plausible to me is if funds +are lost due to people not be careful about losing small amounts; even +though they are careful when amounts are larger. So when 10k BTC was +worth $40, maybe it doesn't matter if you misplace a hard drive with +7500 BTC on it since that's only worth $30; but by the time 7500 BTC +is worth $150M, maybe you take a bit more care with that, but are still +not too worried if you lose 1.5mBTC, since that's also only worth $30. + +To mathematise that, perhaps there are K people holding Bitcoin, and with +probability p, each loses $100 (in constant 2009 dollars say, so that we +can ignore inflation) of that Bitcoin a year through carelessness. For +an equilibrium to occur in that case, you need: + + N(t) + k - (100/P * Kp) = N(t) + +where P is the price of Bitcoin (again in constant 2009 dollars) and k +is Peter's fixed tail subsidy. Simplifying gives: + + P = K * 100p/k + +But k and p are constant by assumption in this scenario, so equilibrium +is reached only if price (P) is exactly proportional to number of +users (K). That requires you to have a non-inflationary currency +(supply is constant) with constant adoption (assume K doesn't change) +that maintains a constant price (P=K*100p/k) in real terms even if the +economy is otherwise expanding or contracting. + +More importantly, just from a goals point of view, x is something we +should be finding ways to minimise it over time, not leave constant. +In fact, you could argue for an even stronger goal: "the real value held +in BTC lost each year should decrease", that is, x should be decreasing +faster than 1/(N(t)*P). + +Cheers, +aj + + |