5 ms·

Transaction fees will always make it economical to mine. They currently make up a small fraction of the block reward, but within a decade or two (5 block subsid

by tromp 5y ago

Transaction fees will always make it economical to mine. They currently make up a small fraction of the block reward, but within a decade or two (5 block subsidy halvings), we can expect them to dominate. Btw, not all cryptocurrencies are deflationary [1]. [1] https://john-tromp.medium.com/a-case-for-using-soft-total-supply-1169a188d153 https://john-tromp.medium.com/a-case-for-using-soft-total-su...

brianwawok 5y ago
It won't if people realize that BTC is not a useful product, and the price falls to $1k or $100. At that point no one except someone stealing electricity can afford to mine, so the entire monetary system collapses and becomes worth the same as US Civil War dollars (can maybe buy a loaf of bread with a wheelbarrow full?)
- snapcaster 5y ago
  Given that bitcoin has been around for 2008, at what point will you personally concede that it's not likely to happen? Why would it happen now if it didn't in the first 13 years?
  - bluecalm 5y ago
    Madoff's scam lasted for 17 years and only collapsed because of sharp economic downturn. It could have lasted for much longer if people suddenly didn't need the cash. Bitcoin is often described as distributed Ponzi. There is little value (skipping over regulations is about the only thing it's useful for) and a lot artificial pumping. It will collapse when people need money for something else so either economic downturn (exactly the thing crypto believers think they are hedging against) or when it slowly goes out of fashion (probably either due to regulation catching up or something much better coming about). Till then the show goes on. Even if there is just 10% of real dollars behind those valuations it will not matter until there is a bit of a run to cash out.
    - caoilte 5y ago
      Yup. And, "It will happen slowly at first. Then all at once."
    - rfd4sgmk8u 5y ago
      The reality is everything is a Ponzi. Equities. Real Estate. Economies. The thing that Bitcoiners have realized, that I think you may not have quite understood yet, is that there is no 'cash run out'. Brrrrr... Cash is infinite. Bitcoin is not. That is part of its fundamental value proposition.
      - bluecalm 5y ago
        Stocks are not Ponzi wtf? Even today you can get something like Apple making 3% per year while also having big chance of making more in the future. It has nothing to do with a Ponzi scheme at all while artificially propped up producing absolutely nothing crypto currencies have a lot of similarities. The argument that scarcity is a fundamental value proposition for an asset is just nonsense. I can make my own crypto even more limited than BTC overnight and it will worth about 0. It's not scarcity that makes stuff valuable. In case of BTC 3 things make it valuable: adoption, ability to make transaction while skipping over regulations (which requires adoption) and artificial propping by scams like Tether.
        rfd4sgmk8u 5y ago
        Stocks are a ponzi by definition. All growth in stock prices are dependent on extracting money from future investors. It gets a little more complex with corporate stock buybacks, but ignoring this, the price of a stock tracks a companies success, but is ultimately a product of the market buy/sells. Without injection of funds by the corporation, its a Ponzi like anything else. Even more so for stock that does not issue dividends. Same goes for housing, or anything else with scarcity. Wall street has done a great disservice making you believe the price of a stock accurately reflects the value added by the corporation. I agree that adoption (network effect, Metcalfs Law), censorship resistance and other economic constructs like stablecoins all have an influence in value. Folks have been saying "I can make my own, scarcity is bunk" for a long time now. 10,000 other clones of bitcoin exist today that are worth nothin'. Maybe there is something about big b Bitcoin and the cryptoeconomic model that Satoshi chose.
  - skohan 5y ago
    I think it's a bit disingenuous to use 2008 as the point of reference. Bitcoin didn't really reach the point of public consciousness before the 2017 boom (which was largely attributable to price manipulation. Prior to that the main use-case was buying drugs online, and prior to that it was a niche hobby for libertarian futurists. Given the increasing prevalence of ransomeware attacks, and the fact that they have touched higher and higher profile targets, it's not impossible to imagine the regulatory hammer coming down on cryptocurrency at some point in the near-ish future.
  - brianwawok 5y ago
    It's going to be a flash and a poof though. I don't think it's going to go down 10% a year for 10 years or something. I do think it may drop 50-70% in one day/week, which makes miners shut down, which causes a full collapse.
menzoic 5y ago
A good example of non deflationary cryptocurrency is ethereum
- yholio 5y ago
  That's certainly not a good example. The price has grown much faster than inflation in the western world, while the issuance of new currency has trended down, not only as a percentage of total money supply, but in nominal terms: https://www.wisdomtree.com/-/media/us-media-files/blog/blog-images-2/2021/08-02-21-2/figure-1_ether-issuance-and-supply.png https://www.wisdomtree.com/-/media/us-media-files/blog/blog-... While in theory the community can elect to inflate the money supply, in practice the people who get to vote on the issue are holders of currency, who have strong incentives to restrict the supply and deflate the currency. If an inflationary EIP is proposed, these people will simply ignore it and stick to the deflationary chain.
  - wuliwong 5y ago
    There is always confusion when discussing deflation and inflation because there are multiple definitions. There is a inflation/deflation which refers to the size of supply and then price inflation which refers to the cost in some other fiat currency. The former is simple and clear, the latter depends on other variables.
    - yholio 5y ago
      Ethereum is deflationary by both definitions, the market value increases while the rate of disbursement decreases with time.
      - tromp 5y ago
        Regarding supply behaviour, you're confusing deflationary with disinflationary (yearly inflation rate going down toward 0).
        yholio 5y ago
DSMan195276 5y ago
That's only true if people are actually willing to pay that much in fees though. If the amount from fees doesn't keep up then eventually some miners will have to stop mining.

by tromp 5y ago

brianwawok 5y ago

It won't if people realize that BTC is not a useful product, and the price falls to $1k or $100. At that point no one except someone stealing electricity can afford to mine, so the entire monetary system collapses and becomes worth the same as US Civil War dollars (can maybe buy a loaf of bread with a wheelbarrow full?)

snapcaster 5y ago
Given that bitcoin has been around for 2008, at what point will you personally concede that it's not likely to happen? Why would it happen now if it didn't in the first 13 years?
- bluecalm 5y ago
  Madoff's scam lasted for 17 years and only collapsed because of sharp economic downturn. It could have lasted for much longer if people suddenly didn't need the cash. Bitcoin is often described as distributed Ponzi. There is little value (skipping over regulations is about the only thing it's useful for) and a lot artificial pumping. It will collapse when people need money for something else so either economic downturn (exactly the thing crypto believers think they are hedging against) or when it slowly goes out of fashion (probably either due to regulation catching up or something much better coming about). Till then the show goes on. Even if there is just 10% of real dollars behind those valuations it will not matter until there is a bit of a run to cash out.
  - caoilte 5y ago
    Yup. And, "It will happen slowly at first. Then all at once."
  - rfd4sgmk8u 5y ago
    The reality is everything is a Ponzi. Equities. Real Estate. Economies. The thing that Bitcoiners have realized, that I think you may not have quite understood yet, is that there is no 'cash run out'. Brrrrr... Cash is infinite. Bitcoin is not. That is part of its fundamental value proposition.
    - bluecalm 5y ago
      Stocks are not Ponzi wtf? Even today you can get something like Apple making 3% per year while also having big chance of making more in the future. It has nothing to do with a Ponzi scheme at all while artificially propped up producing absolutely nothing crypto currencies have a lot of similarities. The argument that scarcity is a fundamental value proposition for an asset is just nonsense. I can make my own crypto even more limited than BTC overnight and it will worth about 0. It's not scarcity that makes stuff valuable. In case of BTC 3 things make it valuable: adoption, ability to make transaction while skipping over regulations (which requires adoption) and artificial propping by scams like Tether.
      - rfd4sgmk8u 5y ago
        Stocks are a ponzi by definition. All growth in stock prices are dependent on extracting money from future investors. It gets a little more complex with corporate stock buybacks, but ignoring this, the price of a stock tracks a companies success, but is ultimately a product of the market buy/sells. Without injection of funds by the corporation, its a Ponzi like anything else. Even more so for stock that does not issue dividends. Same goes for housing, or anything else with scarcity. Wall street has done a great disservice making you believe the price of a stock accurately reflects the value added by the corporation. I agree that adoption (network effect, Metcalfs Law), censorship resistance and other economic constructs like stablecoins all have an influence in value. Folks have been saying "I can make my own, scarcity is bunk" for a long time now. 10,000 other clones of bitcoin exist today that are worth nothin'. Maybe there is something about big b Bitcoin and the cryptoeconomic model that Satoshi chose.
- skohan 5y ago
  I think it's a bit disingenuous to use 2008 as the point of reference. Bitcoin didn't really reach the point of public consciousness before the 2017 boom (which was largely attributable to price manipulation. Prior to that the main use-case was buying drugs online, and prior to that it was a niche hobby for libertarian futurists. Given the increasing prevalence of ransomeware attacks, and the fact that they have touched higher and higher profile targets, it's not impossible to imagine the regulatory hammer coming down on cryptocurrency at some point in the near-ish future.
- brianwawok 5y ago
  It's going to be a flash and a poof though. I don't think it's going to go down 10% a year for 10 years or something. I do think it may drop 50-70% in one day/week, which makes miners shut down, which causes a full collapse.

menzoic 5y ago

A good example of non deflationary cryptocurrency is ethereum

yholio 5y ago
That's certainly not a good example. The price has grown much faster than inflation in the western world, while the issuance of new currency has trended down, not only as a percentage of total money supply, but in nominal terms: https://www.wisdomtree.com/-/media/us-media-files/blog/blog-images-2/2021/08-02-21-2/figure-1_ether-issuance-and-supply.png https://www.wisdomtree.com/-/media/us-media-files/blog/blog-... While in theory the community can elect to inflate the money supply, in practice the people who get to vote on the issue are holders of currency, who have strong incentives to restrict the supply and deflate the currency. If an inflationary EIP is proposed, these people will simply ignore it and stick to the deflationary chain.
- wuliwong 5y ago
  There is always confusion when discussing deflation and inflation because there are multiple definitions. There is a inflation/deflation which refers to the size of supply and then price inflation which refers to the cost in some other fiat currency. The former is simple and clear, the latter depends on other variables.
  - yholio 5y ago
    Ethereum is deflationary by both definitions, the market value increases while the rate of disbursement decreases with time.
    - tromp 5y ago
      Regarding supply behaviour, you're confusing deflationary with disinflationary (yearly inflation rate going down toward 0).
      - yholio 5y ago

DSMan195276 5y ago

That's only true if people are actually willing to pay that much in fees though. If the amount from fees doesn't keep up then eventually some miners will have to stop mining.