There’s nothing preventing Bitcoin miners from modifying the Bitcoin supply algorithm and inflation rate, except for their collective unwillingness to do so.
Bitcoin block rewards go down over time in Bitcoin terms—but so far the long term trend has been that the rewards have gone up in USD terms. We have never seen a sustained, long-term decline in the block reward in USD terms.
When we have seen short-term declines in the USD-denominated block reward, the hash rate has also declined—meaning a good number of miners have stopped mining.
What happens if the price of Bitcoin stagnates in the long term? Will miners still mine when the block reward is slashed again? Or will they decide to modify the algorithm to ensure that they remain profitable?
In fact, a majority of miners did try to strongarm a fork 5 years ago, and they failed, because the users did not agree. There was even been a book written about it. https://www.amazon.com/Blocksize-War-controls-Bitcoins-proto...
If they tried again, they would fail again -- literally nobody would agree to a fork whose purpose is to enrich miners at the users' expense.
The Bitcoin Cash fork happened when prices were rising and the inflation rate was still high. What would the balance of power have been if the block reward were 1/16 what it was at that time? What if the only miners willing to stay in the network were trying to exploit it in some other way, because the block reward was insufficient an incentive?
In that kind of environment, both users and miners might start looking to make changes.
The security issue with less miners is the whole 51% attack, but even with a substantial drop in miners, it would still mean the attacker would need many thousands of nodes. Seems like that kind of energy and spend would be more profitable mining.
But transaction fees are determined based on supply and demand for transactions, not based on how much value on the chain is secured by them.
These are only tangentially related, and the strategy of 'store of value' makes them even less well coupled.
Unless there is high demand for transacting, then the economic pressure will be for the cost of attacking the chain to come down, and double spending the value stored on the chain will increasingly become more appealing than transaction fees.
The current equilibrium relies on the supply increasing.
It is absolutely possible but not practical. The selling point of bitcoin in this regard is that the work needed to take over the network is relative to the size of the network.
You can 51% a small shitcoin all day. It might cost you $50,000 to do it and now you control a coin that has become worthless because it got hacked by you.
I would not be surprised if a large crypto exchange takes over bitcoin mining some time in the future. Crypto gamblers don't really care about decentralisation or censorship resistance. They only want the number to go up.
This is as true as saying that the United States Department of Treasury sets the supply of dollars in stone. Bitcoin is as fixed as the relatively small number of parties who run the network want it to be. If enough of them wanted to fork it, remove the deflationary model, change their rewards, etc. most users would be dragged along for the ride because there’s no anchor.
An uncapped emission like 1 coin per second forever would be more immutable as it is simple as possible (not to mention much fairer) and leaves no uncertainty about long term security.