Napkin math suggests Bitcoin will perish unless its mining incentives change

In essence, if mining incentives go low (and unspoken in title: If transaction volumes stay low so that transaction incentives are also low), then a 51% attack becomes trivial over time b/c miners drop out.

So, either we start using bitcoin a lot, generating significant transaction fee revenue to keep miners in, or it's doomed to an inevitable compromise.

So they are attacking bitcoin as a stable store of value, but not necessarily as a currency. Is there a road to 1000x more daily transactions? I don't know. It's currently more like a blue chip stock than a currency or asset.

And, at the one-hour mark, this post got knocked out of the top 10 on HN's front page to the 106th spot on the 4th page, for no stated reason, which has happened before. (Perhaps it's HN's "flame war detector", idk; for me, that usually only knocks a post to Page 2). None of the comments are too negative about the piece. But in any case, this will likely get flagged by enough users, and I get it - people own a lot of this stuff. It's a major looming issue for the space though (Bitcoin dominates all other cryptos). It's another reason a project is in trouble: when you can't have tough and open conversations about it.

That would be a positive. We need alternatives other than just burning energy to base a currency on.

Capped supply is overrated anyway [1].

[1] https://john-tromp.medium.com/a-case-for-using-soft-total-su...

> For years, analysts have gone on channels like CNBC calling Bitcoin “digital gold”, and many everyday crypto investors truly believe that.

This has always been silly. You can stick gold in a basement and come back 200 years later to find it completely intact. Redeeming bitcoin depends not only on a functioning software ecosystem (imagine trying to run today's software 200 years from now) but also on the mining community continuing to operate forever.

Bitcoin's primary appeal has always been unregulated, online exchange of value.

I would assume this would be somewhat concerning for anybody investing in crypto.

Correct me if I'm misguided - I'm not an economist, let alone a crypto-economist - I would assume the price of a bitcoin would go up as the mining rewards get fewer and fewer, but with Bitcoin being "tied" in a sense with traditional currencies, I wonder how much of a effect the lowering mining rewards would have compared to other global economic factors.

Is this the kind of event where investors/holders hit critical mass where they start selling off their Bitcoin, leaving a bunch of bag-holders? Or, will the idea of having scarcity keep the currency going? I somewhat understand that the USD was a gold-backed currency before, which I would think (again, not an economist), keep the value of the currency more stable, compared to the system we have now? I'm curious if there's any parallels between the old "gold standard" and limited availability of crypto like Bitcoin.

Very interesting. I've always wanted to play around with crypto stuff but haven't sat down and given it a decent go.

“Bitcoin security” is a different notion than almost all other popular chains. A prolonged 51% attack on bitcoin implies the ability to double-spend, but not at all the ability to affect prior balances. A 51% attack on most smart contract chains implies the ability to change any and all state arbitrarily.

The simplest solution is to wait until the cost of hashing exceeds the value of your transaction by some reasonable factor. I expect that better solutions will come along by soft fork without adverse effect on supply or decentralization.

There are two flaws in the argument:

> they would need to pay ~$37.50 to move them, which would likely cause them to make fewer transactions

Various soft forks to Bitcoin have been proposed that will allow a higher transaction rate. Even without them, people will pay not only $37.50 for a transaction, but even $100 on the busy days. This is because only big transactions will need to happen on layer 1. Smaller transactions can continue on layer 2. Secondly, no, there don't have to be fewer transactions, especially as the technical fixes to the transaction scalability are introduced.

Even so, the transaction fees only delay the inevitable, which is the complete stoppage of miner rewards, so the argument is not without merit. Relying on miners to secure the network seems weird.

Bitcoin will eventually need to move to Proof of Stake like Ethereum did. Or to maintain a fixed supply without any issuance whatsoever, Bitcoin could convert entirely into an ERC-20 on Ethereum (probably the best option but would never happen)

A key mistake is to think that mining rewards are measured in coins, whereas they are actually measured in fiat currency. Miners pay their bills in dollars/pounds/euros/etc. To them, the price of a coin matters as much as the mining reward. As Bitcoin becomes scarce to obtain, it's price will skyrocket, offsetting any reduction in mining incentives. It's designed to balance itself.

And of course if it becomes a real problem, the miners will update the codebase.

Someone has been independently "discovering" this every fortnight since I first heard the word Bitcoin. The answer will always always be, read the bitcoin whitepaper please... This is explicitly discussed.

Nothing new here. This has been known since 2009-ish.

Good?