[Bitcoin-segwit2x] Segwit2x Final Steps

[Melvin Carvalho]

On 11 November 2017 at 02:25, digitsu <jerry.d.chan at bittoku.co.jp> wrote:

>
> On Nov 10, 2017, at 20:44, Melvin Carvalho via Bitcoin-segwit2x <
> bitcoin-segwit2x at lists.linuxfoundation.org> wrote:
>
>
>
>
> A note on fees:  Consider a system where instead of users paying a fee for
> a transaction, every holder of bitcoin pays a very small amount to
> subsidize the mining of that tx.  In a sense that is exactly what happens
> with the inflationary block reward.  The number of coins is increased and
> everyone's holding is very slightly diluted.  But that secures a high value
> network.  However, that block reward will go away.  In 40 years it will be
> 1000 times less, and in 80 years, one million times less.  As such, a high
> capacity network with zero fees cannot be made secure with distributed
> zero-trust proof of work.  It helps to take a holistic view towards fees,
> rather than, trying to pass them from one entity to another.  Tough
> problems to solve, but we have (hopefully) some smart thinkers on the case,
> and a bit of time to get there …
>
>
>
> I have to disagree here. I see the block subsidy rewards as the subsidy to
> *grow* the network, not to maintain it.  The transactional fees will
> maintain the network in steady state once the subsidy runs out.  The only
> question is how big can we grow the network with the subsidy until it is
> gone.  If the network doesn’t grow large enough and useful enough such that
> the steady state fees can’t maintain the miners costs then we could see
> some interesting economic shifts.  It may very well be the steady state
> case that every business that depends on bitcoin must enter mining
> themselves.  And that may well be a good thing.
>

Absolutely agree!

But the point I was trying to get across is that there are tradeoffs
involved.  It would be trivial to solve the double spend problem using a
central mint or a few nodes, as Satoshi pointed out.  However it is then
possible to play whack-a-mole if the nodes are too few, obviating the value
proposition.

Most people call bitcoin a deflationary currency.  That is not the case, it
is, in fact, clearly inflationary.  In that new coins are produced every
day.  Those coins are a subsidy from existing holders (sic!) in order to
facilitate artificially lower fees.  IMHO that is a subtle point, not
always realized, that is not always as prominent as it could be in the
overall conversation.

In particular, it is an exponentially reductive subsidy.

That means we have a limited window to innovate, relative to the incumbent
financial system, who have superior resources.  Only part of the issues are
technical, another part (for example establishing consensus) are social.

I for one look forward to these challenges and am optimistic we have the
combined resources to make a difference! :)
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