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Comment by wyldfire | Hacker News Reader

> it can't be printed

New coins are minted with every block. But perhaps you mean to suggest that it's "stable" or "predictable." The emission rate of bitcoin is predictable - but this is predicated on the stability/predictability of the community of miners/stakers. It seems extremely irrational now, but if something were to change such that the community decided to drastically increase or decrease the block reward, they could indeed do so if they found consensus.

> its supply is not responsive to price.

While this is probably true, the value of mining equipment is directly related to the exchange rate of bitcoin (and perhaps its recent rate of increase/decrease). This doesn't impact supply, but it does impact the network OpEx.

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Well, not just predictable but hard capped at 21M, about 19.8M (or ~94%) of which have already been mined. So in some sense, inflation tax can't exceed ~6% over all time.

(I don't think it's a sustainable model, as security essentially decays over time, unless fees become extremely high which doesn't seem like a great outcome either. But that's another matter...)

There are a few answers to the long-term security budget:

1) We could maintain fees through compression, that is, by making each on-chain transaction representative of many off-chain transactions. This is beginning to happen with the lightning network, and other technologies are in the works to advance this concept.

2) Mining will become more integrated with other industrial and residential processes, which will reduce the cost of security, from a compensation standpoint. Think bitcoin miner water and space heaters in many homes, etc.

3) It's also likely that in the future institutions that rely heavily on bitcoin will voluntarily subsidize security to some extent, for the same reason they invest in vaults for other instruments. Personally I'm planning to start running a lottery miner at home just for the fun of it.

(2) is interesting, but I'm not sure if resistance heaters will remain common in the long term, as heat pumps become more widely available?

Also this seems like a sort of free-electricity scenario (mining with electricity that was going to be used anyway), but I'm not sure free electricity would reduce mining costs? Wouldn't hardness adjust so that it then becomes all about hardware CapEx (assuming amortized CapEx remains significant)?

I figure mining costs are around 1% of the market cap, and can't go that much lower without serious security risks. So the ecosystem needs to fund that in some way, whether it's through inflation, fees, or donations.

With fees, I also worry they'll be too unpredictable. Like there might be enough demand to justify $20B/year in fees, but it's a function of supply as well, and if scaling solutions like Lightning Network work "too well" (with people rarely needing to settle on-chain) we might end up with way lower fees.

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