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It's the tradeoff made for a distributed money supply. Satoshi just as easily could have made a fixed supply of money which is also stable and doesn't rely on p
by lojack 9y ago
It's the tradeoff made for a distributed money supply. Satoshi just as easily could have made a fixed supply of money which is also stable and doesn't rely on proof of work.
That said, at the time, I don't think this was really the tradeoff being made. When bitcoin originally came out, proof of work was the only decentralized consensus mechanism available.
- jamez1 9y agoHaving a distributed money supply makes it unstable, since you've tied an incentive to creating bitcoin. Money supply would then be equal to how many miners there are without adding a difficulty, and the amount of bitcoins would go through the roof. Difficulty was clearly added as a solution after this to keep the money supply stable. Note I didn't say it's necessary to waste electricity to have a stable money supply, only that the reason Bitcoin does is because it keeps it's money supply stable.
- lojack 9y agoDifficulty adjustment is used to keep block times stable. Without this adjustment block times would continue to go down until you would eventually end up with a chain that has much more frequent forks of greater lengths. You eventually end up with a state where the current head becomes indeterminate and all sorts of security issues become possible, including double spends. Bitcoin could have easily based block rewards on timestamps to keep the supply of money consistent, similar to how the current difficulty is calculated.