Alex Lee [ARCHIVE] / is on Nostr

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🗓️ Active from 2022-06-28 to 2022-06-29
💬 Posted a total of 2 messages
📚 Participated in the following categories: bitcoin-dev
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2023-06-07 23:10:09

- reply

📅 Original date posted:2022-06-29
📝 Original message:On Tue, Jun 28, 2022 at 7:22 PM Peter Todd <pete at petertodd.org> wrote:
> On Tue, Jun 28, 2022 at 12:23:40PM -0400, Alex Lee via bitcoin-dev wrote:
> > > > Those who never transact, never realize any benefit.
> > >
> > > While that's true, its not relevant and basically a red herring. You
> need
> > > to compare those who transact often and rarely hold, to those who hold
> a
> > > lot but rarely transact. Its not helpful to consider those who throw
> their
> > > bitcoin into a bottomless pit and never retrieve them.
> > >
> >
> > There are legitimate uses for burning bitcoin, speaking of bottomless
> pits.
> > I would avoid confusing velocity metrics with utility, as these aren't
> the
> > same thing.
>
> All the legitimate uses for burning bitcoin are _not_ done via a
> "bottomless
> pit": they're done with transactions proving that the bitcoin has actually
> been
> burnt. And the value obtained by burning BTC in those scenarios is
> affected by
> tx fees and inflation just as much as any other tx.
>
>
The "bottomless pit" is a metaphor for the inability to spend the coins
again in the future once burned, as Billy appeared to be indicating that
the frequent movement of coins in itself somehow produced utility.
Naturally you are correct that the utility of the burn comes from the
proof; I am not sure what the meaning of "burned coins" would be without
the proof to be honest.
> --
> https://petertodd.org 'peter'[:-1]@petertodd.org
>
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2023-06-07 23:10:08

- reply

📅 Original date posted:2022-06-28
📝 Original message:On Tue, Jun 28, 2022 at 4:43 AM Billy Tetrud via bitcoin-dev <
bitcoin-dev at lists.linuxfoundation.org> wrote:
> @Eric
> > People who transact are realizing the benefit of money - the avoidance
> of barter costs.
>
> I'm very confident you're incorrect that holders don't receive any benefit
> and you're certainly not correct that every spend is receiving the same
> benefit. As I'm sure you're aware, one of the primary components of a
> currency's value and purpose is as a store of value. Storing value happens
> while you're holding it, not while you're spending it. Consider the
> following two scenarios: one person holds onto 10 bitcoin for 10 years and
> then spends those 10 bitcoins in some way in 2 transactions. Another person
> spends 4 bitcoins to buy something, then sells it for 6 bitcoins, and then
> buys something else for that 6 bitcoins and then never acquires any bitcoin
> for 10 years.
>
> Both people spent 10 bitcoins over 2 transactions. Over that 10 year
> period, only one of those people utilized bitcoin's utility as a store of
> value. Who benefited more from their use of bitcoin?
>
>
The person who obtained greater economic utility from their two
transactions.
> > Those who never transact, never realize any benefit.
>
> While that's true, its not relevant and basically a red herring. You need
> to compare those who transact often and rarely hold, to those who hold a
> lot but rarely transact. Its not helpful to consider those who throw their
> bitcoin into a bottomless pit and never retrieve them.
>
There are legitimate uses for burning bitcoin, speaking of bottomless pits.
I would avoid confusing velocity metrics with utility, as these aren't the
same thing.
>
> On an idealistic level, I agree with Keagan that it would make sense to
> have "a balance of fees to that effect". I think doing that would be
> technically/economically optimal. However, I think there is an enormous
> benefit to having a cultural aversion to monetary inflation and the
> consequences of convincing the bitcoin community that inflation is ok could
> have unintended negative consequences (not to mention how difficult
> convincing the community would be in the first place). There's also the
> economic distortion that inflation causes that has a negative effect which
> should also be considered. The idea of decaying utxo value is interesting
> to consider, but it would not solve the economic distortion that
> monetary inflation causes, because that distortion is a result of monetary
> devaluation (which decaying utxos would be a form of). Then again, maybe in
> this case the distortion of inflation would actually be a correction -
> correcting for the externality of benefit received by holders. I'm
> stream-of-consciousnessing a bit, but anyways, I suspect its not worth the
> trouble to perfect the distribution of bitcoin blockchain security costs to
> include holders. Tho, if I were to go back in time and influence how
> bitcoin was designed, I might advocate for it.
>
> @Peter
> > demurrage and inflation have identical economic properties.
>
> The distortion of incentives is identical, however there is also the
> effect it has on a currency's property as a useful unit of account.
> Decaying utxos would mean that it would contribute substantially less to
> market prices needing to change. I suspect this effect would be bordering
> on negligible tho.
>
> On Thu, Jun 23, 2022 at 2:17 PM Peter Todd via bitcoin-dev <
> bitcoin-dev at lists.linuxfoundation.org> wrote:
>
>> On Tue, Jun 21, 2022 at 01:00:07PM -0600, Keagan McClelland via
>> bitcoin-dev wrote:
>> > > The PoW security of Bitcoin benefits all Bitcoin users, proportional
>> to
>> > the
>> > value of BTC they hold; if Bitcoin blocks aren't reliably created the
>> value
>> > of
>> > *all* BTC goes down. It doesn't make sense for the entire cost of that
>> > security
>> > to be paid for on a per-tx basis. And there's a high chance paying for
>> it
>> > on a
>> > per-tx basis won't work anyway due to lack of consistent demand.
>> >
>> > FWIW I prefer the demurrage route. Having something with finite supply
>> as a
>> > means of measuring economic activity is unprecedented and I believe
>> deeply
>> > important. I'm sympathetic to the argument that the security of the
>> chain
>> > should not be solely the responsibility of transactors. We realize the
>> > value of money on receipt, hold *and* spend and it would be appropriate
>> for
>> > there to be a balance of fees to that effect. While inflation may be
>> > simpler to implement (just chop off the last few halvings), I think it
>> > would be superior (on the assumption that such a hodl tax was
>> necessary) to
>> > keep the supply fixed and have people's utxo balances decay, at least at
>> > the level of the UX.
>>
>> Demurrage makes protocols like Lightning much more complex, and isn't
>> compatible with existing implementations. While demurrage could in theory
>> be
>> implemented in a soft-fork by forcing txs to contain an output with the
>> demurrage-taxed amount, spending to a pool of future mining fees, I really
>> don't think it's practical to actually do that.
>>
>> Anyway, demurrage and inflation have identical economic properties.
>> They're
>> both a tax on savings. The only difference is the way that tax is
>> implemented.
>>
>> --
>> https://petertodd.org 'peter'[:-1]@petertodd.org
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>> bitcoin-dev at lists.linuxfoundation.org
>> https://lists.linuxfoundation.org/mailman/listinfo/bitcoin-dev
>>
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