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From: Billy Tetrud <billy.tetrud@gmail.com>
Date: Sun, 1 Jan 2023 22:53:39 -0600
Message-ID: <CAGpPWDa6GusMVXAFxTQ=oakwApHyYQYieFwygj5CZwen6yZp6g@mail.gmail.com>
To: jk_14@op.pl
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Cc: Bitcoin Protocol Discussion <bitcoin-dev@lists.linuxfoundation.org>
Subject: Re: [bitcoin-dev] Pseudocode for robust tail emission
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> is surely better than not delaying it.

I might agree, but I don't think it really solves the problem well enough
to be worth it. Any solution that would solve the problem better would make
delaying halvings unnecessary.

> there is non-zero risk that people will hoard it more and more, according
to old Gresham's law

Gresham's law doesn't apply here. Gresham's law is about the interaction
between two currencies with a fixed, usually government-enforced exchange
rate. You seem to be saying that Bitcoin will be hoarded because Bitcoin
inflation reduces every halving. But even with 0 inflation, it certainly
won't cause all Bitcoin to be hoarded. Also, "hoarding" is also known as
"saving", and there's nothing wrong with saving. The spectre of deflation
comes from a misunderstanding of deflation and why it happens during bad
economic times. It is an effect, not a cause.

On Sun, Jan 1, 2023, 15:23 <jk_14@op.pl> wrote:

>
> Yes, the idea is:
> if mining activity is growing - let's execute consecutive halvings
> but if miner exodus has happened - let's delay next halving until mining
> activity is recovered to previous levels
>
> If it gets to the point where a sudden drop in mining difficulty happens =
-
> delaying the next halving may be not sufficient to correct, but is surely
> better than not delaying it.
>
> While Bitcoin is better and better money with every halving in comparisio=
n
> to other types of money - there is non-zero risk that people will hoard i=
t
> more and more, according to old Gresham's law ("HODL"). And this way
> decreasing liquidity / transactions volume. The positive feedback loop - =
is
> my real concern here.
>
> Regarding the relationship between difficulty and security - I fully agre=
e.
> But ASIC technology is already matured. And also any technology
> breakthrough is a short event within 4 years period.
> So growth of difficulty could be gained by technology breakthrough, but
> any sudden drop of difficulty would be always an issue, while there is no
> such thing as: ASIC technology regression.
>
> Obviously, not complicated solution would be better than complicated one.
>
>
> W dniu 2022-12-30 19:21:10 u=C5=BCytkownik Billy Tetrud <billy.tetrud@gma=
il.com>
> napisa=C5=82:
>
> If the idea is to ensure that a catastrophic miner exodus doesn't happen,
> the "difference" you're calculating should only care about downward
> differences. Upward differences indicate more mining activity and so
> shouldn't cause a halving skip.
>
> But I don't think any scheme like this that only acts on the basis of
> difficulty will be sufficient. If it gets to the point where a sudden dro=
p
> in mining difficulty happens, it is very likely that simply delaying the
> next halving or even ending halving all together will not be sufficient t=
o
> correct for whatever is causing hashrate to tank. There is also the dange=
r
> of simple difficulty stagnation, which this mechanism wouldn't detect.
>
> The relationship between difficulty and security becomes less and less
> predictable the longer you want to look ahead. There's no long term
> relation between difficulty and any reasonable security target. A securit=
y
> target might be something like "no colluding group with less than $1
> trillion dollars at their disposal could successfully 51% attack the
> network (with a probability of blah blah)". There is no way to today
> program in any code that detects based on difficult alone when that
> criteria is violated. You would have to program in assumptions about the
> cost of hashrate projected into the future.
>
> I can't think of any robust automatic way to do this. I think to a certai=
n
> degree, it will have to be a change that happens in a fork of some kind
> (soft or hard) periodically (every 10 years? 30 years?). The basic
> relations needed is really the cost in Bitcoin of the security target (ie
> the minimum number of Bitcoin it should take to 51% attack the system) an=
d
> the cost in Bitcoin of acquiring a unit of hashrate. This could be simply
> input into the code, or could use some complicated oracle system. But wit=
h
> that relation, the system could be programmed to calculate the difficulty
> necessary to keep the system secure.
>
> Once that is in place, the system could automatically adjust the subsidy
> up or down to attract more or less miners, or it could adjust the block
> size up or down to change the fee market such that more or less total fee=
s
> are collected each block to attract more or less miners.
>
> On Tue, Dec 27, 2022, 09:41 Jaroslaw via bitcoin-dev <
> bitcoin-dev@lists.linuxfoundation.org> wrote:
>
>>
>> It seems like the more elegant solution could be by using a chainwork
>> parameter instead.
>> i.e. comparison just before halving - if the last 210,000 block interval
>> has a higher chainwork difference between the begining and the end of
>> interval
>> than any other such inter-halving interval before.
>>
>> LIttle digression yet:
>> A system in which all users participate in ensuring its security looks
>> better than one in which only some (i.e. active) of them participate (an=
d
>> passive stakeholders are de facto free riders)
>> In my opinion this concept above is only the complement of currently
>> missing mechanism: achieving equilibrium regarding costs of security
>> between two parties with opposing interests.
>> It's easy to understand and - most important - it has no hardcoded value
>> of tail emission - what is the clear proof it is based on a free market.
>> And last but not least, if someone is 100% sure that income from
>> transactions will takeover security support from block subsidy - accepti=
ng
>> such proposal is like putting the money where the mouth is: this safety
>> measure will never be triggered, then (no risk of fork)
>>
>>
>> Best Regards
>> Jaroslaw
>>
>>
>>
>> W dniu 2022-12-23 20:29:20 u=C5=BCytkownik Jaroslaw via bitcoin-dev <
>> bitcoin-dev@lists.linuxfoundation.org> napisa=C5=82:
>> >
>> Necessary or not - it doesn't hurt to plan the robust model, just in
>> case. The proposal is:
>>
>> Let every 210,000 the code calculate the average difficulty of 100 last
>> retargets (100 fit well in 210,000 / 2016 =3D 104.166)
>> and compare with the maximum of all such values calculated before, every
>> 210,000 blocks:
>>
>>
>> if average_diff_of_last_100_retargets >
>> maximum_of_all_previous_average_diffs
>>         do halving
>> else
>>         do nothing
>>
>>
>> This way:
>>
>> 1. system cannot be played
>> 2. only in case of destructive halving: system waits for the recovery of
>> network security
>>
>>
>> Best Regards
>> Jaroslaw
>> _______________________________________________
>> 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"><div dir=3D"auto">&gt;=C2=A0<span style=3D"font-size:12.8p=
x">is surely better than not delaying it.</span><div dir=3D"auto"><span sty=
le=3D"font-size:12.8px"><br></span></div><div dir=3D"auto"><span style=3D"f=
ont-size:12.8px">I might agree, but I don&#39;t think it really solves the =
problem well enough to be worth it. Any solution that would solve the probl=
em better would make delaying halvings unnecessary.=C2=A0</span></div><div =
dir=3D"auto"><span style=3D"font-size:12.8px"><br></span></div><div dir=3D"=
auto"><span style=3D"font-size:12.8px">&gt;=C2=A0</span>there is non-zero r=
isk that people will hoard it more and more, according to old Gresham&#39;s=
 law</div><div dir=3D"auto"><br></div><div dir=3D"auto">Gresham&#39;s law d=
oesn&#39;t apply here. Gresham&#39;s law is about the interaction between t=
wo currencies with a fixed, usually government-enforced exchange rate. You =
seem to be saying that Bitcoin will be hoarded because Bitcoin inflation re=
duces every halving. But even with 0 inflation, it certainly won&#39;t caus=
e all Bitcoin to be hoarded. Also, &quot;hoarding&quot; is also known as &q=
uot;saving&quot;, and there&#39;s nothing wrong with saving. The spectre of=
 deflation comes from a misunderstanding of deflation and why it happens du=
ring bad economic times. It is an effect, not a cause.</div><br><div class=
=3D"gmail_quote" dir=3D"auto"><div dir=3D"ltr" class=3D"gmail_attr">On Sun,=
 Jan 1, 2023, 15:23  &lt;<a href=3D"mailto:jk_14@op.pl" target=3D"_blank">j=
k_14@op.pl</a>&gt; wrote:<br></div><blockquote class=3D"gmail_quote" style=
=3D"margin:0 0 0 .8ex;border-left:1px #ccc solid;padding-left:1ex"><div><br=
>Yes, the idea is:<br>if mining activity is growing - let&#39;s execute con=
secutive halvings<br>but if miner exodus has happened - let&#39;s delay nex=
t halving until mining activity is recovered to previous levels<br><br>If i=
t gets to the point where a sudden drop in mining difficulty happens - dela=
ying the next halving may be not sufficient to correct, but is surely bette=
r than not delaying it.<br><br>While Bitcoin is better and better money wit=
h every halving in comparision to other types of money - there is non-zero =
risk that people will hoard it more and more, according to old Gresham&#39;=
s law (&quot;HODL&quot;). And this way decreasing liquidity / transactions =
volume. The positive feedback loop - is my real concern here.<br><br>Regard=
ing the relationship between difficulty and security - I fully agree.<br>Bu=
t ASIC technology is already matured. And also any technology breakthrough =
is a short event within 4 years period.<br>So growth of difficulty could be=
 gained by technology breakthrough, but any sudden drop of difficulty would=
 be always an issue, while there is no such thing as: ASIC technology regre=
ssion.</div>
<div><br>Obviously, not complicated solution would be better than complicat=
ed one.</div>
<div>=C2=A0</div>
<div>=C2=A0</div>
<div>W dniu 2022-12-30 19:21:10 u=C5=BCytkownik Billy Tetrud &lt;<a href=3D=
"mailto:billy.tetrud@gmail.com" rel=3D"noreferrer" target=3D"_blank">billy.=
tetrud@gmail.com</a>&gt; napisa=C5=82:</div>
<blockquote style=3D"margin-right:0;margin-left:7px;border-left:2px solid o=
range;padding-left:8px">
<div dir=3D"ltr">
<div dir=3D"auto">If the idea is to ensure that a catastrophic miner exodus=
 doesn&#39;t happen, the &quot;difference&quot; you&#39;re calculating shou=
ld only care about downward differences. Upward differences indicate more m=
ining activity and so shouldn&#39;t cause a halving skip.
<div dir=3D"auto">
<div dir=3D"auto">=C2=A0</div>
<div dir=3D"auto">But I don&#39;t think any scheme like this that only acts=
 on the basis of difficulty will be sufficient. If it gets to the point whe=
re a sudden drop in mining difficulty happens, it is very likely that simpl=
y delaying the next halving or even ending halving all together will not be=
 sufficient to correct for whatever is causing hashrate to tank. There is a=
lso the danger of simple difficulty stagnation, which this mechanism wouldn=
&#39;t detect.=C2=A0</div>
<div dir=3D"auto">=C2=A0</div>
<div>The relationship between difficulty and security becomes less and less=
 predictable the longer you want to look ahead. There&#39;s no long term re=
lation between difficulty and any reasonable security target. A security ta=
rget might be something like &quot;no colluding group with less than $1 tri=
llion dollars at their disposal could successfully 51% attack the network (=
with a probability of blah blah)&quot;. There is no way to today program in=
 any code that detects based on difficult alone when that criteria is viola=
ted. You would have to program in assumptions about the cost of hashrate pr=
ojected into the future.</div>
<div dir=3D"auto">=C2=A0</div>
<div dir=3D"auto">I can&#39;t think of any robust automatic way to do this.=
 I think to a certain degree, it will have to be a change that happens in a=
 fork of some kind (soft or hard) periodically (every 10 years? 30 years?).=
 The basic relations needed is really the cost in Bitcoin of the security t=
arget (ie the minimum number of Bitcoin it should take to 51% attack the sy=
stem) and the cost in Bitcoin of acquiring a unit of hashrate. This could b=
e simply input into the code, or could use some complicated oracle system. =
But with that relation, the system could be programmed to calculate the dif=
ficulty necessary to keep the system secure.</div>
<div dir=3D"auto">=C2=A0</div>
<div dir=3D"auto">Once that is in place, the system could automatically adj=
ust the subsidy up or down to attract more or less miners, or it could adju=
st the block size up or down to change the fee market such that more or les=
s total fees are collected each block to attract more or less miners.=C2=A0=
</div>
</div>
</div>
</div>
<br>
<div class=3D"gmail_quote">
<div class=3D"gmail_attr" dir=3D"ltr">On Tue, Dec 27, 2022, 09:41 Jaroslaw =
via bitcoin-dev &lt;<a href=3D"mailto:bitcoin-dev@lists.linuxfoundation.org=
" rel=3D"noopener noreferrer" target=3D"_blank">bitcoin-dev@lists.linuxfoun=
dation.org</a>&gt; wrote:</div>
<blockquote class=3D"gmail_quote" style=3D"margin:0px 0px 0px 0.8ex;border-=
left:1px solid #cccccc;padding-left:1ex"><br>It seems like the more elegant=
 solution could be by using a chainwork parameter instead.<br>i.e. comparis=
on just before halving - if the last 210,000 block interval has a higher ch=
ainwork difference between the begining and the end of interval<br>than any=
 other such inter-halving interval before.<br><br>LIttle digression yet:<br=
>A system in which all users participate in ensuring its security looks bet=
ter than one in which only some (i.e. active) of them participate (and pass=
ive stakeholders are de facto free riders)<br>In my opinion this concept ab=
ove is only the complement of currently missing mechanism: achieving equili=
brium regarding costs of security between two parties with opposing interes=
ts.<br>It&#39;s easy to understand and - most important - it has no hardcod=
ed value of tail emission - what is the clear proof it is based on a free m=
arket.<br>And last but not least, if someone is 100% sure that income from =
transactions will takeover security support from block subsidy - accepting =
such proposal is like putting the money where the mouth is: this safety mea=
sure will never be triggered, then (no risk of fork)<br><br><br>Best Regard=
s<br>Jaroslaw<br><br><br><br>W dniu 2022-12-23 20:29:20 u=C5=BCytkownik Jar=
oslaw via bitcoin-dev &lt;<a href=3D"mailto:bitcoin-dev@lists.linuxfoundati=
on.org" rel=3D"noopener noreferrer noreferrer" target=3D"_blank">bitcoin-de=
v@lists.linuxfoundation.org</a>&gt; napisa=C5=82:<br>&gt; <br>Necessary or =
not - it doesn&#39;t hurt to plan the robust model, just in case. The propo=
sal is:<br><br>Let every 210,000 the code calculate the average difficulty =
of 100 last retargets (100 fit well in 210,000 / 2016 =3D 104.166)<br>and c=
ompare with the maximum of all such values calculated before, every 210,000=
 blocks:<br><br><br>if average_diff_of_last_100_retargets &gt; maximum_of_a=
ll_previous_average_diffs<br>=C2=A0 =C2=A0 =C2=A0 =C2=A0 do halving<br>else=
<br>=C2=A0 =C2=A0 =C2=A0 =C2=A0 do nothing<br><br><br>This way:<br><br>1. s=
ystem cannot be played<br>2. only in case of destructive halving: system wa=
its for the recovery of network security<br><br><br>Best Regards<br>Jarosla=
w<br>_______________________________________________<br>bitcoin-dev mailing=
 list<br><a href=3D"mailto:bitcoin-dev@lists.linuxfoundation.org" rel=3D"no=
opener noreferrer noreferrer" target=3D"_blank">bitcoin-dev@lists.linuxfoun=
dation.org</a><br><a href=3D"https://lists.linuxfoundation.org/mailman/list=
info/bitcoin-dev" rel=3D"noopener noreferrer noreferrer noreferrer" target=
=3D"_blank">https://lists.linuxfoundation.org/mailman/listinfo/bitcoin-dev<=
/a><br><br><br><br>_______________________________________________<br>bitco=
in-dev mailing list<br><a href=3D"mailto:bitcoin-dev@lists.linuxfoundation.=
org" rel=3D"noopener noreferrer noreferrer" target=3D"_blank">bitcoin-dev@l=
ists.linuxfoundation.org</a><br><a href=3D"https://lists.linuxfoundation.or=
g/mailman/listinfo/bitcoin-dev" rel=3D"noopener noreferrer noreferrer noref=
errer" target=3D"_blank">https://lists.linuxfoundation.org/mailman/listinfo=
/bitcoin-dev<br></a></blockquote>
</div>
</blockquote>
</blockquote></div></div>
</div>

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