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Is it desirable, much less moral, for a percentage of the world's wealth be continually diverted to support mining? I wouldn't take an absolute hard line position that it wasn't desirable, or even that it wouldn't be moral (at least in so far as it was a system people consented to use)-- but the reasonableness of this depends critically on the amount. Would 0.001% be acceptable? I suppose! would 10%? Absolutely not.
Let's suppose a truly devastating war somehow kills half of the global population. For reference, WW2 only managed to kill about 3-4%. We'll also suppose that every single person who was killed lost their private keys, and absolutely no-one left backups to surviving relatives.
If 10% of the world's wealth/year was going to mining after that catastrophic event, 5% of the world's wealth/year must have been getting destroyed in boating accidents.
Sorry, but that's a ridiculous example. And not because of the specific amount: the proportions mean that to get a measly doubling of reward - a reward so low it matches what people lose by accident - half the entire coin supply has to somehow be lost in a massive catastrophe.
If that happens the "transitory" inflation might become extremely market distorting, ultimately harming civilization by directing an unconscionable share of resources to mining or (more likely) causing the system to be abandoned.
In no world is 2x unconscionable where 1x was just fine. Especially when the 1x happened to be what people lose by accident on a regular basis.
The uncertainty of the amount works in the other direction too: Continued subsidy isn't guaranteed to be enough to support security in any meaningful sense, it could be too small to achieve its intended goal as well as too large. Because of economic cycles the same scheme could even be both, disruptively overpaying during economic slumps (diverting resources to excess security) and disastrously underpaying during economic booms (failing to achieve the security goals). Without thinking carefully you might think that sometimes underpaying would still be better than zero subsidy but that isn't clear to me because unpredictability in security is itself a problem because it interferes with compensating behaviors.
Again, there is no way that we can be "disruptively overpaying" with a tail emission approximately equal to what people lose by accident.
...and yes, obviously the continued subsidy isn't guaranteed to be high enough to support security. But as long as Bitcoin is in the billions to trillions market cap range, the level of threat a 0.1% to 1% subsidy is protecting against is the kind of very expensive outside attack that's difficult to predict anyway. All you can do is spend an affordable level of wealth to protect yourself, and hope it'll be enough.
If it's not, there's a good chance that Bitcoin is entirely nonviable anyway, as it's just worth enough to be worth protecting. If Bitcoiner's need to spend 10%+ per year of their entire wealth to protect the network, it may not be worth it at all.
With these points in mind I think Satoshi made a very good decision. Bitcoin's tail subsidy scheme of zero is the unique amount of tail subsidy guaranteed to (eventually) never overpay. It is the value with the minimum amount of economic uncertainty, excluding security considerations.
That's absurd. Overpaying isn't a concern when you're paying a tiny % of your wealth. What Satoshi did was take a perfectly good system, and build into it a massive long-term unknown in how we'll pay for security.
It's notable that people regularly pay hundreds of times more than strictly necessary in fees. Just look at any block explorer: https://mempool.space/block/000000000000000000030da833111fd3c4ade500b3b96963fadb4523475fe529
That block has a median fee of 15sat/vB, yet some transactions are paying as much as 2007sat/vB. Why? When you're moving millions of dollars fixing your fee estimator to save $10 isn't high on the priority list.
I sure don't care about spending 0.1% or 1% per year of my wealth to keep Bitcoin secure. But I do care that everyone else also chips in so we don't have a tragedy of the commons.
It does make a weaker argument for long term network security, but since tail subsidy schemes are unable to make a strong argument that they're actually able to meaningful improve security (much less guarantee it!) I don't find that weakness particularly compelling. There are many uncertainties about Bitcoin's security and long term income for mining being insufficient is one of them (probably not even the most concerning one). Making the economic policy clear and simple is worth it, especially since security isn't going to be clear regardless. I'm pretty confident that if Bitcoin originally had perpetual subsidy the market would just be further diluted by variants that had different amounts of it. Zero is a pretty strong attractor in the design space, 0.01 vs 0.02% is far less clear.
If you were right, that'd still be happening in alt-coins. So where are the examples?
Being first is much stronger attractor than zero... Especially when "first" in this case could also have just as easily marketed itself as "zero"
I think our experience so far makes a basic case for Bitcoin's security: Bitcoin generates fee income today which is greater than the total (inflation subsidized) income of many altcoins that seem to be going without attack. Is this a security guarantee? No, but it's the first test and Bitcoin appears to be passing it. Assuming it does work I think we're obviously better off with it as it is-- I don't think anyone arguing for tail subsidy would still argue for it if they were confident the system would be secure without it: The only time you can make a clearly moral case for forcing someone to pay someone else is on the basis of necessity. If Bitcoin's scheme turns out to not work out then users in the future will have many alternatives they could consider-- including adopting Bitcoin variants that are created that have constant subsidy (as tail subsidizers propose) or attempt to achieve security through other means. To those people, should that future ever come to exist, the discussion will be much simpler though because they'll know if Satoshi's simple economic-effect minimizing scheme works or not, they'll know if alternatives are necessary.
Yes, and by seeding the alternatives in peoples' minds now, it's much easier to have that discussion later. It's also more likely that alternatives will exist that don't make the mistakes Satoshi did.
