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From: Eric <zhiguang53846@gmail.com>
Date: Sat, 7 Jan 2023 18:22:02 -0500
Message-ID: <CADv3YEbRX7fsG5ci6HH2RvU=PRZ=QQFkcEYY-dLQAaRsGHOi6A@mail.gmail.com>
To: Bitcoin Protocol Discussion <bitcoin-dev@lists.linuxfoundation.org>
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Subject: Re: [bitcoin-dev] Pseudocode for robust tail emission
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if by security you mean the security of the currency, i don't think people
have much to worry about

coinbase as far as i know is starting to behave more bank-like.  i think
there is a nostr bot that does block updates and doesn't factor in coinbase
at all

On Sat, Jan 7, 2023 at 2:13 PM Jaroslaw via bitcoin-dev <
bitcoin-dev@lists.linuxfoundation.org> wrote:

>
> > Anyways if it turns out that fees alone don't look like they're
> supporting enough security, we have a good amount of time to come to that
> conclusion and do something about it.
>
> The worst-case scenario is that the first global hashrate regression may
> take place in 2028.
> Instead of the average price increase at least x2 every halving - the
> global hashrate may gradually decrease from that point. Again, it would b=
e
> the worst-case scenario.
>
> In my proposal you don't need to think about any calculations - just
> simple logic which we have right now. No hardcoded values and the free
> market in its finest - self-regulating the level of taxation of parties
> involved, but with opposite interests. And the mechanism would try to fix=
 a
> global hashrate regression if appear.
> In other words: let's be optimistic regarding fees, but with emergency
> mechanism built-in just in case.
> The only drawback here is that the system is already running.
>
> In my personal opinion avoiding long-term global hashrate regression is
> more important for store of value feature than the 21M schelling point (o=
r
> trap...)
>
>
>
>
> W dniu 2023-01-04 17:03:33 u=C5=BCytkownik Billy Tetrud <billy.tetrud@gma=
il.com>
> napisa=C5=82:
> > In Bitcoin "the show must go on" and someone must pay for it. Active
> [and/or] passive users
>
>
> I certainly agree.
>
>
> > or more precisely: tiny inflation
>
>
> =F0=9F=91=8D
>
>
> > Right now security comes from almost fully from ~1.8% inflation.
>
>
> Best I could find, fees make up about 13% of miner revenue. So yes, the
> vast majority of security comes from coinbase rewards. I assume you're
> implying that ~13% of today's security is not enough? I would love to see
> any quantitative thoughts you have on how one might determine that.
>
>
> Have there been any thoughts put out in the community as to what size of
> threat is unlikely enough to arise that we don't need to worry about it?
> Maybe 1% of the yearly government budgets of the world would be an upper
> bound on how much anyone would expect could realistically be brought to
> bear? Today that would be maybe around $350 billion.
>
>
> Or perhaps a better way to estimate would be calculating the size of the
> motivation of an attacker. For example, this paper seems to conclude that
> the US government was extracting a maximum of ~$20 billion/year in 1982
> dollars (so maybe $60 billion/year in 2022 dollars if you go by CPI). If =
we
> scale this up to the entire world of governments, this seems like it woul=
d
> place an upper bound of $180 billion/year of seigniorage extraction that
> would be at risk if bitcoin might put the currencies they gain seigniorag=
e
> from out of business. Over 10 years (about as far as we can expect any
> government to think), that's almost $2 trillion.
>
>
> Whereas it would currently cost probably less than $7 billion to purchase
> a 50% share of bitcoin miners. To eventually reach a level of $350 billio=
n,
> bitcoin's price would need to reach about $800,000 / bitcoin. That seems
> within the realm of possibility. To reach a level of $2 trillion, you'd
> need a price of $4.3 million/bitcoin. That's still probably within the
> realm of possibility, but certainly not as likely.  If you then assume we
> won't have significant coinbase rewards by that point, and only 13% of th=
e
> equivalent revenue (from fees) would be earned, then a price of ~$6 milli=
on
> would be needed to support a $350 billion and $34 million to support a $2
> trillion security. I think that second one is getting up towards the real=
m
> of impossibility, so if we think that much security is necessary, we migh=
t
> have to rethink things. Its also quite possible, as the network of people
> who accept and use bitcoin as payment grows, that the fee market will gro=
w
> superlinearly in comparison to market cap, which would make these kind of
> high levels of security more realistic.
>
>
> Anyways if it turns out that fees alone don't look like they're supportin=
g
> enough security, we have a good amount of time to come to that conclusion
> and do something about it.
>
>
> > Deflation in Bitcoin is not 1:1 matter like in gold, for example...
> Deflation in Bitcoin is more complex issue
>
>
> It's helpful to keep our language precise here. Price inflation and
> deflation act identically in bitcoin and gold and anything else. What you
> seem to be talking about at this point is monetary inflation (specificall=
y,
> a reduction in it) which of course operates differently on the machinery =
of
> bitcoin than it does in the machinery of gold or other things. Whereas my
> comment about you mentioning Gresham's law was specifically talking about
> price inflation, not the effects of the coin emission machinery in bitcoi=
n.
>
>
>
>
> _______________________________________________
> bitcoin-dev mailing list
> bitcoin-dev@lists.linuxfoundation.org
> https://lists.linuxfoundation.org/mailman/listinfo/bitcoin-dev
>
>
>
>
> _______________________________________________
> bitcoin-dev mailing list
> bitcoin-dev@lists.linuxfoundation.org
> https://lists.linuxfoundation.org/mailman/listinfo/bitcoin-dev
>

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<div dir=3D"ltr">if by security you mean the security of the currency, i do=
n&#39;t think people have much to worry about<div><br></div><div>coinbase a=
s far as i know is starting to behave more bank-like.=C2=A0 i think there i=
s a nostr bot that does block updates and doesn&#39;t factor in coinbase at=
 all</div></div><br><div class=3D"gmail_quote"><div dir=3D"ltr" class=3D"gm=
ail_attr">On Sat, Jan 7, 2023 at 2:13 PM Jaroslaw via bitcoin-dev &lt;<a hr=
ef=3D"mailto:bitcoin-dev@lists.linuxfoundation.org">bitcoin-dev@lists.linux=
foundation.org</a>&gt; wrote:<br></div><blockquote class=3D"gmail_quote" st=
yle=3D"margin:0px 0px 0px 0.8ex;border-left:1px solid rgb(204,204,204);padd=
ing-left:1ex"><br>
&gt; Anyways if it turns out that fees alone don&#39;t look like they&#39;r=
e supporting enough security, we have a good amount of time to come to that=
 conclusion and do something about it.=C2=A0<br>
<br>
The worst-case scenario is that the first global hashrate regression may ta=
ke place in 2028.<br>
Instead of the average price increase at least x2 every halving - the globa=
l hashrate may gradually decrease from that point. Again, it would be the w=
orst-case scenario.<br>
<br>
In my proposal you don&#39;t need to think about any calculations - just si=
mple logic which we have right now. No hardcoded values and the free market=
 in its finest - self-regulating the level of taxation of parties involved,=
 but with opposite interests. And the mechanism would try to fix a global h=
ashrate regression if appear.<br>
In other words: let&#39;s be optimistic regarding fees, but with emergency =
mechanism built-in just in case.<br>
The only drawback here is that the system is already running.<br>
<br>
In my personal opinion avoiding long-term global hashrate regression is mor=
e important for store of value feature than the 21M schelling point (or tra=
p...)<br>
<br>
<br>
<br>
<br>
W dniu 2023-01-04 17:03:33 u=C5=BCytkownik Billy Tetrud &lt;<a href=3D"mail=
to:billy.tetrud@gmail.com" target=3D"_blank">billy.tetrud@gmail.com</a>&gt;=
 napisa=C5=82:<br>
&gt; In Bitcoin &quot;the show must go on&quot; and someone must pay for it=
. Active [and/or] passive users=C2=A0<br>
<br>
<br>
I certainly=C2=A0agree.=C2=A0<br>
<br>
<br>
&gt; or more precisely: tiny inflation<br>
<br>
<br>
=F0=9F=91=8D<br>
<br>
<br>
&gt; Right now security comes from almost fully from ~1.8% inflation.<br>
<br>
<br>
Best I could find, fees make up about 13% of miner revenue. So yes, the vas=
t majority of security comes from coinbase rewards. I assume you&#39;re imp=
lying that ~13% of today&#39;s security is not enough? I would love to see =
any quantitative=C2=A0thoughts you have on how one might determine that.=C2=
=A0<br>
<br>
<br>
Have there been any thoughts put out in the community as to what size of th=
reat is unlikely enough to arise=C2=A0that we don&#39;t need to worry about=
 it? Maybe 1% of the yearly=C2=A0government budgets=C2=A0of the world=C2=A0=
would be an upper bound on how much anyone would expect could realistically=
 be brought to bear? Today that would be maybe around $350 billion.=C2=A0<b=
r>
<br>
<br>
Or perhaps a better way to estimate would be calculating the size of the mo=
tivation of an attacker. For example, this paper=C2=A0seems to conclude tha=
t the US government was extracting a maximum of ~$20 billion/year in 1982 d=
ollars (so maybe $60 billion/year in 2022 dollars if you go by CPI). If we =
scale this up to the entire world of governments, this seems like it would =
place an upper bound of $180 billion/year of seigniorage extraction that wo=
uld be at risk if bitcoin might put the currencies they gain seigniorage fr=
om out of business. Over 10 years (about as far as we can expect any govern=
ment to think), that&#39;s almost $2 trillion.=C2=A0<br>
<br>
<br>
Whereas it would currently cost probably less than $7 billion=C2=A0to purch=
ase a 50% share of bitcoin miners. To eventually reach a level of $350 bill=
ion, bitcoin&#39;s price would need to reach about $800,000 / bitcoin. That=
 seems within the realm of possibility. To reach a level of $2 trillion, yo=
u&#39;d need a price of $4.3 million/bitcoin. That&#39;s still probably wit=
hin the realm of possibility, but certainly not as likely.=C2=A0 If you the=
n assume we won&#39;t have significant coinbase rewards by that point, and =
only 13% of the equivalent revenue (from fees) would be earned, then a pric=
e of ~$6 million would be needed to support a $350 billion and $34 million =
to support a $2 trillion security. I think that second one is getting up to=
wards the realm of impossibility, so if we think that much security is nece=
ssary, we might have to rethink things. Its also quite possible, as the net=
work of people who accept and use bitcoin as payment grows, that the fee ma=
rket will grow superlinearly in comparison to market cap, which would make =
these kind of high levels of security more realistic.=C2=A0<br>
<br>
<br>
Anyways if it turns out that fees alone don&#39;t look like they&#39;re sup=
porting enough security, we have a good amount of time to come to that conc=
lusion and do something about it.=C2=A0<br>
<br>
<br>
&gt; Deflation in Bitcoin is not 1:1 matter like in gold, for example...=C2=
=A0 Deflation in Bitcoin is more complex issue<br>
<br>
<br>
It&#39;s helpful to keep our language precise here. Price inflation and def=
lation act identically in bitcoin and gold and anything else. What you seem=
 to be talking about at this point is monetary inflation (specifically, a r=
eduction in it) which of course operates differently on the machinery of bi=
tcoin than it does in the machinery of gold or other things. Whereas my com=
ment about you mentioning Gresham&#39;s law was specifically talking about =
price inflation, not the effects of the coin emission machinery in bitcoin.=
=C2=A0<br>
<br>
<br>
<br>
<br>
_______________________________________________<br>
bitcoin-dev mailing list<br>
<a href=3D"mailto:bitcoin-dev@lists.linuxfoundation.org" target=3D"_blank">=
bitcoin-dev@lists.linuxfoundation.org</a><br>
<a href=3D"https://lists.linuxfoundation.org/mailman/listinfo/bitcoin-dev" =
rel=3D"noreferrer" target=3D"_blank">https://lists.linuxfoundation.org/mail=
man/listinfo/bitcoin-dev</a><br>
<br>
<br>
<br>
<br>
_______________________________________________<br>
bitcoin-dev mailing list<br>
<a href=3D"mailto:bitcoin-dev@lists.linuxfoundation.org" target=3D"_blank">=
bitcoin-dev@lists.linuxfoundation.org</a><br>
<a href=3D"https://lists.linuxfoundation.org/mailman/listinfo/bitcoin-dev" =
rel=3D"noreferrer" target=3D"_blank">https://lists.linuxfoundation.org/mail=
man/listinfo/bitcoin-dev</a><br>
</blockquote></div>

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