đź“… Original date posted:2022-07-08
📝 Original message:> Simply fork off an inflation coin and test your theory. I mean, that’s the only way it can happen anyway.
That would be an altcoin. But it can be done in a simpler way: we have 21 million coins. It doesn't matter if it is 21 million, if it is 100 million, or if it is in some normalized range from 0 to 1, where you can always know, what fraction of the total supply you have. So, if the total supply is constant, then it is all about proportions. And that means, you can create some system on top of Bitcoin, that would move coins from users to miners. It is all about that: if all coins are mined, then they can move only if users will move them. So if you want to change that, it is all about encouraging them to put their coins in some evil Lightning channel, when they will lose their coins over time. That's how inflation works.
So, imagine some evil channel, where you can put for example 0.01 BTC, and have a time-based fee, so you will pay 1000 satoshis per day. Guess what: 1000 days, and your coins are gone! That means, if anyone want to test inflation, it is possible right here and right now. Good luck to convince people to use your inflationary system in a non-obfuscated way, because that's how it truly looks like: if you double coin supply, you can reach the same by halving all amounts.
On 2022-07-08 02:29:20 user Eric Voskuil via bitcoin-dev <bitcoin-dev at lists.linuxfoundation.org> wrote:
Value is subjective, though a constraint of 1tx per 10 minutes seems unlikey to create a fee of 5000x that of 5000tx. This is of course why I stated my assumption. Yet this simple example should make clear that at some point a reduction in confirmation rate reduces reward. Otherwise a rate of zero implies infinite reward.Â
You cannot support the blanket statement (and absent any assumption) that lower confirmation rates produce “much higher fees” or “better security”.
What you call a “bidding war” is merely market pricing, as it occurs with any good. People *always* will pay as much as they will pay. This is tautological. What you cannot say is how much more someone will pay at any given time for any given good, until they have done it. And I’m pretty sure Bitcoin hasn’t done it.
You cannot prove what the price of anything will be, nor can any “papers”. The absurdity of S2F should have clearly demonstrated that by now. Value is an individual human preference.
If everyone pays 1 sat, then either miners are profitable at 1 sat, or these people are not getting confirmed (economic rationality always assumed).
The assumption of 1 sat txs filling blocks is based on a disproportionately high subsidy. A subsidy of 50btc would imply somewhere in the neighborhood of $200 per tx in fees today, and as $680. As that falls, fees will continue to keep miners at the same profit level. If demand does not rise to compensate (as it always has) then hash rate will fall.
Propping up hash rate with subsidy will not be “inflationary”, as Bitcoin is a market money. Like gold it is produced at market cost. Yet it will prevent Bitcoin from achieving any meaningful level of censorship resistance. This of course should make people look closely at such arguments.
Of course, once you have a censor, block space gets really small for those who want to resist the censor. Then of course only fees can offset the censorship. Without fee-based tx confirmation (for anonymity), and/or with a disproportionate subsidy going to the censor, a censor can operate profitably and indefinitely (under the assumption of constant demand). There is no reason to assume demand for censored txs wouldn’t even increase, given the white market blessing which so many seem to want.
But there is of course no real issue here. Simply fork off an inflation coin and test your theory. I mean, that’s the only way it can happen anyway.
e
On Jul 7, 2022, at 14:11, Erik Aronesty <erik at q32.com> wrote:
The relationship between block size and fees is not remotely linear.  In a restricted environment, the fee rewards are much higher.
**the ones moving more sats will win the top spots and will pay as much as is reasonable**
Smaller blocks produce better security for the network both in validation, and in fees.
Without a bidding war for space, everyone can post 1 SAT/byte
With a bidding war for space, larger transactions will pay much higher rates.  There have been a number of papers written on this but you can concoct a trivial example to prove it.
On Thu, Jul 7, 2022 at 3:58 PM Eric Voskuil <eric at voskuil.org> wrote:
It’s not clear how reducing block size changes the fee aspect of the block reward. Assuming half the space implies twice the fee per avg tx the reward remains constant.
Any additional cost of processing more or less bytes would not matter, because of course this is just a cost that gets nulled out by difficulty — average profit (net income) is the cost of capital.
The reason for smaller vs. larger blocks is to ensure that individuals can afford to validate. That’s a threshold criteria.
Given unlimited size blocks, miners would still have to fix a point in time to mine, gathering as much fee as they can optimize in some time period presumably less than 10 minutes. The produces a limit to transaction volume, yet neither reward nor profit would be affected given the above assumptions. The difference would be in a tradeoff of per tx fee against the threshold.
Given Moore’s Law, that threshold is constantly decreasing, which will make it  cheaper over time for more individuals to validate. But the difference for miners for smaller blocks is largely inconsequential relative to their other costs.
Increasing demand is the only thing that increases double spend security (and censorship resistance assuming fee-based reward). With rising demand there is rising overall hash rate, despite block reward and profit remaining constant. This makes the cost of attempting to orphan a block higher, therefore lowering the depth/time requirement implied to secure a given tx amount.
These are the two factors, demand and time. Less demand implies more time to secure a given amount against double spend, and also implies a lower cost to subsidize a censorship regime. But the latter requires a differential in reward between the censor and non-censoring miners. While this could be paid in side fees, that is a significant anonymity issue.
e
On Jul 7, 2022, at 10:37, Erik Aronesty <erik at q32.com> wrote:
> > We should not imbue real technology with magical qualities.
> Precisely. It is economic forces (people), not technology, that provide security.
Yes, and these forces don't prevent double-spend / 51% attacks if the amounts involved are greater than the incentives.
In addition to "utility", lowering the block size could help prevent this issue as well... increasing fee pressure and double-spend security while reducing the burden on node operators.
Changes to inflation are, very likely, off the table.
On Thu, Jul 7, 2022 at 12:24 PM Eric Voskuil via bitcoin-dev <bitcoin-dev at lists.linuxfoundation.org> wrote:
> On Jul 7, 2022, at 07:13, Peter Todd via bitcoin-dev <bitcoin-dev at lists.linuxfoundation.org> wrote:
>
> On Thu, Jul 07, 2022 at 02:24:39PM +0100, John Carvalho via bitcoin-dev wrote:
>> Billy,
>>
>> Proof of work and the difficulty adjustment function solve literally
>> everything you are talking about already.
>
> Unfortunately you are quite wrong: the difficulty adjustment function merely
> adjusts for changes in the amount of observable, non-51%-attacking, hashing
> power. In the event of a chain split, the difficulty adjustment function does
> nothing; against a 51% attacker, the difficulty adjustment does nothing;
> against a censor, the difficulty adjustment does nothing.
Consider falling hash rate due to a perpetual 51% attack. Difficulty falls, possibly to min difficulty if all non-censors stop mining and with all censors collaborating (one miner). Yet as difficulty falls, so does the cost of countering the censor. At min difficulty everyone can CPU mine again.
Given the presumption that fees rise on unconfirmed transactions, there is inherent economic incentive to countering at any level of difficulty. Consequently the censor is compelled to subsidize the loss resulting from forgoing higher fee transactions that are incentivizing its competition.
With falling difficulty this incentive is compounded.
Comparisons of security in different scenarios presume a consistent level of demand. If that demand is insufficient to offset the censor’s subsidy, there is no security in any scenario.
Given that the block subsidy (inflation) is paid equally to censoring and non-censoring miners, it offers no security against censorship whatsoever. Trading fee-based block reward for inflation-based is simply trading censorship resistance for the presumption of double-spend security. But of course, a censor can double spend profitably in any scenario where the double spend value (to the censor) exceeds that of blocks orphaned (as the censor earns 100% of all block rewards).
Banks and state monies offer reasonable double spend security. Not sure that’s a trade worth making.
It’s not clear to me that Satoshi understood this relation. I’ve seen no indication of it. However the decision to phase out subsidy, once a sufficient number of units (to assure divisibility) had been issued, is what transitions Bitcoin from a censorable to a censorship resistant money. If one does not believe there is sufficient demand for such a money, there is no way to reconcile that belief with a model of censorship resistance.
> We should not imbue real technology with magical qualities.
Precisely. It is economic forces (people), not technology, that provide security.
e
>> Bitcoin does not need active economic governanance by devs or meddlers.
>
> Yes, active governance would definitely be an exploitable mechanism. On the
> other hand, the status quo of the block reward eventually going away entirely
> is obviously a risky state change too.
>
>>>> There is also zero agreement on how much security would constitute such
>>> an optimum.
>>>
>>> This is really step 1. We need to generate consensus on this long before
>>> the block subsidy becomes too small. Probably in the next 10-15 years. I
>>> wrote a paper
>
> The fact of the matter is that the present amount of security is about 1.7% of
> the total coin supply/year, and Bitcoin seems to be working fine. 1.7% is also
> already an amount low enough that it's much smaller than economic volatility.
>
> Obviously 0% is too small.
>
> There's zero reason to stress about finding an "optimal" amount. An amount low
> enough to be easily affordable, but non-zero, is fine. 1% would be fine; 0.5%
> would probably be fine; 0.1% would probably be fine.
>
> Over a lifetime - 75 years - 0.5% yearly inflation works out to be a 31% tax on
> savings; 0.1% works out to be 7.2%
>
> These are all amounts that are likely to be dwarfed by economic shifts.
>
> --
> https://petertodd.org 'peter'[:-1]@petertodd.org
> _______________________________________________
> bitcoin-dev mailing list
> bitcoin-dev at lists.linuxfoundation.org
> https://lists.linuxfoundation.org/mailman/listinfo/bitcoin-dev
_______________________________________________
bitcoin-dev mailing list
bitcoin-dev at lists.linuxfoundation.org
https://lists.linuxfoundation.org/mailman/listinfo/bitcoin-dev
vjudeu at gazeta.pl [ARCHIVE] /
npub135…nssga
2023-06-07 23:11:05
in reply to nevent1q…57xa
Author Public Key
npub1357006afyypkgz03lmq8fnuvlkyjt0rukx8rt56ck8xv396jaceqmnssgaPublished at
2023-06-07 23:11:05Event JSON
{
"id": "cd93871d25e20463043166711eeb9ef4a5c8ba361a9afd016221599948d0a2f9",
"pubkey": "8d3cf7eba921036409f1fec074cf8cfd8925bc7cb18e35d358b1ccc89752ee32",
"created_at": 1686179465,
"kind": 1,
"tags": [
[
"e",
"7b48b1d81caa6040c3accea765079d236c2aa24c40321303ab071f7798b24c6d",
"",
"root"
],
[
"e",
"6a53fe01c52a1adc520036f6f785f1c22006d8f7201ad0af4d88bab6a1d5d9ab",
"",
"reply"
],
[
"p",
"82205f272f995d9be742779a3c19a2ae08522ca14824c3a3b01525fb5459161e"
]
],
"content": "📅 Original date posted:2022-07-08\n📝 Original message:\u003e Simply fork off an inflation coin and test your theory. I mean, that’s the only way it can happen anyway.\n\nThat would be an altcoin. But it can be done in a simpler way: we have 21 million coins. It doesn't matter if it is 21 million, if it is 100 million, or if it is in some normalized range from 0 to 1, where you can always know, what fraction of the total supply you have. So, if the total supply is constant, then it is all about proportions. And that means, you can create some system on top of Bitcoin, that would move coins from users to miners. It is all about that: if all coins are mined, then they can move only if users will move them. So if you want to change that, it is all about encouraging them to put their coins in some evil Lightning channel, when they will lose their coins over time. That's how inflation works.\n\nSo, imagine some evil channel, where you can put for example 0.01 BTC, and have a time-based fee, so you will pay 1000 satoshis per day. Guess what: 1000 days, and your coins are gone! That means, if anyone want to test inflation, it is possible right here and right now. Good luck to convince people to use your inflationary system in a non-obfuscated way, because that's how it truly looks like: if you double coin supply, you can reach the same by halving all amounts.\n\n\nOn 2022-07-08 02:29:20 user Eric Voskuil via bitcoin-dev \u003cbitcoin-dev at lists.linuxfoundation.org\u003e wrote:\n\n\nValue is subjective, though a constraint of 1tx per 10 minutes seems unlikey to create a fee of 5000x that of 5000tx. This is of course why I stated my assumption. Yet this simple example should make clear that at some point a reduction in confirmation rate reduces reward. Otherwise a rate of zero implies infinite reward. \n\n\nYou cannot support the blanket statement (and absent any assumption) that lower confirmation rates produce “much higher fees” or “better security”.\n\n\nWhat you call a “bidding war” is merely market pricing, as it occurs with any good. People *always* will pay as much as they will pay. This is tautological. What you cannot say is how much more someone will pay at any given time for any given good, until they have done it. And I’m pretty sure Bitcoin hasn’t done it.\n\n\nYou cannot prove what the price of anything will be, nor can any “papers”. The absurdity of S2F should have clearly demonstrated that by now. Value is an individual human preference.\n\n\nIf everyone pays 1 sat, then either miners are profitable at 1 sat, or these people are not getting confirmed (economic rationality always assumed).\n\n\nThe assumption of 1 sat txs filling blocks is based on a disproportionately high subsidy. A subsidy of 50btc would imply somewhere in the neighborhood of $200 per tx in fees today, and as $680. As that falls, fees will continue to keep miners at the same profit level. If demand does not rise to compensate (as it always has) then hash rate will fall.\n\n\nPropping up hash rate with subsidy will not be “inflationary”, as Bitcoin is a market money. Like gold it is produced at market cost. Yet it will prevent Bitcoin from achieving any meaningful level of censorship resistance. This of course should make people look closely at such arguments.\n\n\nOf course, once you have a censor, block space gets really small for those who want to resist the censor. Then of course only fees can offset the censorship. Without fee-based tx confirmation (for anonymity), and/or with a disproportionate subsidy going to the censor, a censor can operate profitably and indefinitely (under the assumption of constant demand). There is no reason to assume demand for censored txs wouldn’t even increase, given the white market blessing which so many seem to want.\n\n\nBut there is of course no real issue here. Simply fork off an inflation coin and test your theory. I mean, that’s the only way it can happen anyway.\n\n\ne\n\n\nOn Jul 7, 2022, at 14:11, Erik Aronesty \u003cerik at q32.com\u003e wrote:\n\n\n\nThe relationship between block size and fees is not remotely linear.  In a restricted environment, the fee rewards are much higher.\n\n\n**the ones moving more sats will win the top spots and will pay as much as is reasonable**\n\n\nSmaller blocks produce better security for the network both in validation, and in fees.\n\n\nWithout a bidding war for space, everyone can post 1 SAT/byte\n\n\nWith a bidding war for space, larger transactions will pay much higher rates.  There have been a number of papers written on this but you can concoct a trivial example to prove it.\n\n\n\n\nOn Thu, Jul 7, 2022 at 3:58 PM Eric Voskuil \u003ceric at voskuil.org\u003e wrote:\n\n\n\nIt’s not clear how reducing block size changes the fee aspect of the block reward. Assuming half the space implies twice the fee per avg tx the reward remains constant.\n\n\nAny additional cost of processing more or less bytes would not matter, because of course this is just a cost that gets nulled out by difficulty — average profit (net income) is the cost of capital.\n\n\nThe reason for smaller vs. larger blocks is to ensure that individuals can afford to validate. That’s a threshold criteria.\n\n\nGiven unlimited size blocks, miners would still have to fix a point in time to mine, gathering as much fee as they can optimize in some time period presumably less than 10 minutes. The produces a limit to transaction volume, yet neither reward nor profit would be affected given the above assumptions. The difference would be in a tradeoff of per tx fee against the threshold.\n\n\nGiven Moore’s Law, that threshold is constantly decreasing, which will make it  cheaper over time for more individuals to validate. But the difference for miners for smaller blocks is largely inconsequential relative to their other costs.\n\n\nIncreasing demand is the only thing that increases double spend security (and censorship resistance assuming fee-based reward). With rising demand there is rising overall hash rate, despite block reward and profit remaining constant. This makes the cost of attempting to orphan a block higher, therefore lowering the depth/time requirement implied to secure a given tx amount.\n\n\nThese are the two factors, demand and time. Less demand implies more time to secure a given amount against double spend, and also implies a lower cost to subsidize a censorship regime. But the latter requires a differential in reward between the censor and non-censoring miners. While this could be paid in side fees, that is a significant anonymity issue.\n\n\ne\n\n\nOn Jul 7, 2022, at 10:37, Erik Aronesty \u003cerik at q32.com\u003e wrote:\n\n\n\n\u003e \u003e We should not imbue real technology with magical qualities.\n\n\n\u003e Precisely. It is economic forces (people), not technology, that provide security.\n\n\n\nYes, and these forces don't prevent double-spend / 51% attacks if the amounts involved are greater than the incentives.\n\n\nIn addition to \"utility\", lowering the block size could help prevent this issue as well... increasing fee pressure and double-spend security while reducing the burden on node operators.\n\n\nChanges to inflation are, very likely, off the table.\n\n\n\n\n\n\nOn Thu, Jul 7, 2022 at 12:24 PM Eric Voskuil via bitcoin-dev \u003cbitcoin-dev at lists.linuxfoundation.org\u003e wrote:\n\n\n\n\u003e On Jul 7, 2022, at 07:13, Peter Todd via bitcoin-dev \u003cbitcoin-dev at lists.linuxfoundation.org\u003e wrote:\n\u003e\n\u003e On Thu, Jul 07, 2022 at 02:24:39PM +0100, John Carvalho via bitcoin-dev wrote:\n\u003e\u003e Billy,\n\u003e\u003e\n\u003e\u003e Proof of work and the difficulty adjustment function solve literally\n\u003e\u003e everything you are talking about already.\n\u003e\n\u003e Unfortunately you are quite wrong: the difficulty adjustment function merely\n\u003e adjusts for changes in the amount of observable, non-51%-attacking, hashing\n\u003e power. In the event of a chain split, the difficulty adjustment function does\n\u003e nothing; against a 51% attacker, the difficulty adjustment does nothing;\n\u003e against a censor, the difficulty adjustment does nothing.\n\nConsider falling hash rate due to a perpetual 51% attack. Difficulty falls, possibly to min difficulty if all non-censors stop mining and with all censors collaborating (one miner). Yet as difficulty falls, so does the cost of countering the censor. At min difficulty everyone can CPU mine again.\n\nGiven the presumption that fees rise on unconfirmed transactions, there is inherent economic incentive to countering at any level of difficulty. Consequently the censor is compelled to subsidize the loss resulting from forgoing higher fee transactions that are incentivizing its competition.\n\nWith falling difficulty this incentive is compounded.\n\nComparisons of security in different scenarios presume a consistent level of demand. If that demand is insufficient to offset the censor’s subsidy, there is no security in any scenario.\n\nGiven that the block subsidy (inflation) is paid equally to censoring and non-censoring miners, it offers no security against censorship whatsoever. Trading fee-based block reward for inflation-based is simply trading censorship resistance for the presumption of double-spend security. But of course, a censor can double spend profitably in any scenario where the double spend value (to the censor) exceeds that of blocks orphaned (as the censor earns 100% of all block rewards).\n\nBanks and state monies offer reasonable double spend security. Not sure that’s a trade worth making.\n\nIt’s not clear to me that Satoshi understood this relation. I’ve seen no indication of it. However the decision to phase out subsidy, once a sufficient number of units (to assure divisibility) had been issued, is what transitions Bitcoin from a censorable to a censorship resistant money. If one does not believe there is sufficient demand for such a money, there is no way to reconcile that belief with a model of censorship resistance.\n\n\u003e We should not imbue real technology with magical qualities.\n\nPrecisely. It is economic forces (people), not technology, that provide security.\n\ne\n\n\u003e\u003e Bitcoin does not need active economic governanance by devs or meddlers.\n\u003e\n\u003e Yes, active governance would definitely be an exploitable mechanism. On the\n\u003e other hand, the status quo of the block reward eventually going away entirely\n\u003e is obviously a risky state change too.\n\u003e\n\u003e\u003e\u003e\u003e There is also zero agreement on how much security would constitute such\n\u003e\u003e\u003e an optimum.\n\u003e\u003e\u003e\n\u003e\u003e\u003e This is really step 1. We need to generate consensus on this long before\n\u003e\u003e\u003e the block subsidy becomes too small. Probably in the next 10-15 years. I\n\u003e\u003e\u003e wrote a paper\n\u003e\n\u003e The fact of the matter is that the present amount of security is about 1.7% of\n\u003e the total coin supply/year, and Bitcoin seems to be working fine. 1.7% is also\n\u003e already an amount low enough that it's much smaller than economic volatility.\n\u003e\n\u003e Obviously 0% is too small.\n\u003e\n\u003e There's zero reason to stress about finding an \"optimal\" amount. An amount low\n\u003e enough to be easily affordable, but non-zero, is fine. 1% would be fine; 0.5%\n\u003e would probably be fine; 0.1% would probably be fine.\n\u003e\n\u003e Over a lifetime - 75 years - 0.5% yearly inflation works out to be a 31% tax on\n\u003e savings; 0.1% works out to be 7.2%\n\u003e\n\u003e These are all amounts that are likely to be dwarfed by economic shifts.\n\u003e\n\u003e --\n\u003e https://petertodd.org 'peter'[:-1]@petertodd.org\n\u003e _______________________________________________\n\u003e bitcoin-dev mailing list\n\u003e bitcoin-dev at lists.linuxfoundation.org\n\u003e https://lists.linuxfoundation.org/mailman/listinfo/bitcoin-dev\n_______________________________________________\nbitcoin-dev mailing list\nbitcoin-dev at lists.linuxfoundation.org\nhttps://lists.linuxfoundation.org/mailman/listinfo/bitcoin-dev",
"sig": "d05e455d7ed33d50c4636bb00db70e084139826b805d3e82aedef56fc29ea34f589ced9a7e579d98143429bc04048499769369b5bc08928b41cbfd66973b0642"
}