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"Bitcoin's security inevitably weakens over the coming years due to diminishing miner rewards (denominated in BTC)" That's incorrect. Security scales with USD-

by mrb 9mo ago

"Bitcoin's security inevitably weakens over the coming years due to diminishing miner rewards (denominated in BTC)" That's incorrect. Security scales with USD-denominated rewards, not BTC-denominated. And there are 16 years of real-world data showing they have been generally increasing, so a healthy sign that the Bitcoin experiment is working: https://newhedge.io/bitcoin/block-reward-per-block https://newhedge.io/bitcoin/block-reward-per-block And not only that, but rewards are still expected to stabilize even when measured in BTC (thereby not relying on an increase of BTC's price) as they are progressively composed more and more of tx fees instead of newly mined BTC. It's puzzling to me why some still don't understand the systemic incentives that make all this work as it has for 16 years and counting...

free_bip 9mo ago
How are you so confident that it will never weaken? Especially since there will come a time when the block reward is literally 0.
- mrb 9mo ago
  Tx fees make up a bigger and bigger fraction of miner rewards over time.
  - officialchicken 9mo ago
    Rewards are also a permanent infinite money glitch that last in perpetuity? Or won't be changed in the future?
  - rcxdude 9mo ago
    Is a store of value that requires a significant fraction of it be eaten up by transaction fees to maintain security going to be actually useful in the long term?
    - _heimdall 9mo ago
      With regards to transaction fees, bitcoin is already not particularly useful today. It can make sense to be used as an alternative to wire transfers where you only occasionally send a transaction, but it isn't useful as a currency and any day to day transactions have to happen off chain and not use bitcoin at all.
      - rcxdude 9mo ago
        Right, which is why one has to wonder who's going to want to pay enough transaction fees to secure the network.
  - jcfrei 9mo ago
    transaction fees are not increasing though, so they can't offset miner rewards. they have been in the $100k-$200k per day range for a long time, with only occasional breakouts: https://www.blockchain.com/explorer/charts/transaction-fees-usd https://www.blockchain.com/explorer/charts/transaction-fees-... and the trend is not to the upside. in fact with the arrival of ETFs in 2024 the trend is clearly downwards.
  - Saline9515 9mo ago
    Rewards decrease due to halving and there is no guarantee that transaction fees will compensate it.
  - buzzin__ 9mo ago
    But transaction fees reset to zero on each block. If relying solely on transaction fees, why would you mine if they are zero? So, on the start of each block, miners will shutdown, or perhaps switch to a different currency where it would be profitable to mine. This surely weakens the security of Bitcoin.
  - LikesPwsh 9mo ago
    Making up a bigger fraction doesn't mean that transaction fees will increase over time. For L1 fees to actually increase over time, we need increased L1 throughput. Without that, increased demand for transactions causes more batching of transactions (mostly between exchanges). Given the failure of BCH for pseudo-religious reasons I don't have much hope.
officialchicken 9mo ago
> It's puzzling to me why some still don't understand the systemic incentives... Then I guess you're the type who will be really surprised to learn that with diminishing rewards comes increasing consolidation. > ... that make all this work as it has for 16 years and counting... That's convenient way to memory hole the market flash crashes, network forks, the blocks mined without consensus, and everything bad that happened over that timeframe.

by mrb 9mo ago

free_bip 9mo ago

How are you so confident that it will never weaken? Especially since there will come a time when the block reward is literally 0.

mrb 9mo ago
Tx fees make up a bigger and bigger fraction of miner rewards over time.
- officialchicken 9mo ago
  Rewards are also a permanent infinite money glitch that last in perpetuity? Or won't be changed in the future?
- rcxdude 9mo ago
  Is a store of value that requires a significant fraction of it be eaten up by transaction fees to maintain security going to be actually useful in the long term?
  - _heimdall 9mo ago
    With regards to transaction fees, bitcoin is already not particularly useful today. It can make sense to be used as an alternative to wire transfers where you only occasionally send a transaction, but it isn't useful as a currency and any day to day transactions have to happen off chain and not use bitcoin at all.
    - rcxdude 9mo ago
      Right, which is why one has to wonder who's going to want to pay enough transaction fees to secure the network.
- jcfrei 9mo ago
  transaction fees are not increasing though, so they can't offset miner rewards. they have been in the $100k-$200k per day range for a long time, with only occasional breakouts: https://www.blockchain.com/explorer/charts/transaction-fees-usd https://www.blockchain.com/explorer/charts/transaction-fees-... and the trend is not to the upside. in fact with the arrival of ETFs in 2024 the trend is clearly downwards.
- Saline9515 9mo ago
  Rewards decrease due to halving and there is no guarantee that transaction fees will compensate it.
- buzzin__ 9mo ago
  But transaction fees reset to zero on each block. If relying solely on transaction fees, why would you mine if they are zero? So, on the start of each block, miners will shutdown, or perhaps switch to a different currency where it would be profitable to mine. This surely weakens the security of Bitcoin.
- LikesPwsh 9mo ago
  Making up a bigger fraction doesn't mean that transaction fees will increase over time. For L1 fees to actually increase over time, we need increased L1 throughput. Without that, increased demand for transactions causes more batching of transactions (mostly between exchanges). Given the failure of BCH for pseudo-religious reasons I don't have much hope.

officialchicken 9mo ago

> It's puzzling to me why some still don't understand the systemic incentives... Then I guess you're the type who will be really surprised to learn that with diminishing rewards comes increasing consolidation. > ... that make all this work as it has for 16 years and counting... That's convenient way to memory hole the market flash crashes, network forks, the blocks mined without consensus, and everything bad that happened over that timeframe.