5 ms·

if you think about it in the long-term, the rewards eventually go to zero and there's no incentive for any of the miners to mine and the whole thing collapses

by qindra 3y ago

thatguy0900 3y ago
I was under the impression that long term, the fees will increase and the fees will be the miners reward
- paulgb 3y ago
  Unlike the block reward (mining subsidy) which is set according to a fixed schedule, fees are set by the market. They will go up if demand for L1 transactions go up, but there’s nothing in the protocol to push them up over time. Satoshi’s vision was for Bitcoin to be used as digital cash[1], so that transaction demand would be enough to sustain the security of the system. Since the “cash” use case has fallen away to the “store of value” use case, it seems a bit dubious. Transaction costs have recently gone up because of ordinals and NFTs so we’ll see if that sticks. [1] the Bitcoin paper was called “Bitcoin: a Peer-to-Peer Electronic Cash System”
  - faefox 3y ago
    Did the original "digital cash" thesis ever make sense? It's my understanding that Bitcoin can never hope to scale to meet a fraction of daily real-world transaction volume outside of adopting a so-called L2 solution like Lightning Network, which would seem to defeat the point somewhat.
    - paulgb 3y ago
      It certainly couldn’t have covered all of human commerce, but it could cover the sort of transactions where having an uncensorable, irreversible transaction is worth paying a premium for (silk road, etc.)
  - RustyRussell 3y ago
    Well, in practice the mining subsidy is highly variable, as most miners' costs are in local currency, so fees are already set by the market. But I agree that the NFT thing is really a side-effect of fees being low (thus, cheap distributed storage) which probably at best provides a price floor, rather than a sustainable source of revenue.

if you think about it in the long-term, the rewards eventually go to zero and there's no incentive for any of the miners to mine and the whole thing collapses

by qindra 3y ago

if you think about it in the long-term, the rewards eventually go to zero and there's no incentive for any of the miners to mine and the whole thing collapses

thatguy0900 3y ago

I was under the impression that long term, the fees will increase and the fees will be the miners reward

paulgb 3y ago
Unlike the block reward (mining subsidy) which is set according to a fixed schedule, fees are set by the market. They will go up if demand for L1 transactions go up, but there’s nothing in the protocol to push them up over time. Satoshi’s vision was for Bitcoin to be used as digital cash[1], so that transaction demand would be enough to sustain the security of the system. Since the “cash” use case has fallen away to the “store of value” use case, it seems a bit dubious. Transaction costs have recently gone up because of ordinals and NFTs so we’ll see if that sticks. [1] the Bitcoin paper was called “Bitcoin: a Peer-to-Peer Electronic Cash System”
- faefox 3y ago
  Did the original "digital cash" thesis ever make sense? It's my understanding that Bitcoin can never hope to scale to meet a fraction of daily real-world transaction volume outside of adopting a so-called L2 solution like Lightning Network, which would seem to defeat the point somewhat.
  - paulgb 3y ago
    It certainly couldn’t have covered all of human commerce, but it could cover the sort of transactions where having an uncensorable, irreversible transaction is worth paying a premium for (silk road, etc.)
- RustyRussell 3y ago
  Well, in practice the mining subsidy is highly variable, as most miners' costs are in local currency, so fees are already set by the market. But I agree that the NFT thing is really a side-effect of fees being low (thus, cheap distributed storage) which probably at best provides a price floor, rather than a sustainable source of revenue.