"Surprisingly, Tail Emission Is Not Inflationary" -- A post by Peter Todd

[BlackHatCoiner]

Then you should understand, that adding for example 0.01 BTC to the system as a tail emission, is effectively the same situation, as taking single satoshis from all accounts, and giving that to the miners.

You don't get single a specific amount of satoshis from all accounts, though. As you said, from the transaction fee, 0.5 sat/vb goes for the tail emission and the other 0.5 sat/vb for the reward. This means that only those who make transactions are those who fund the future reward. And since you can't charge satoshis from all the addresses without the respective signatures, increasing the supply is the fairest option.

[1715213689]

1715213689

[1715213689]

1715213689

[garlonicon]

I think people don't understand that clearly. Maybe there is a need to create a calculator, where people will type some amount in satoshis, and they will see, how fractions change over time. For example:

Code:

gettxoutsetinfo
{
  "height": 743620,
  "bestblock": "000000000000000000068e2d0b92c9ea69618b5c8c1d4c7721d3493556b18976",
  "txouts": 82609969,
  "bogosize": 6165045008,
  "hash_serialized_2": "c83a32587a725662e438e29276181233f24418aa2dc7c30eac669e3d49f79287",
  "total_amount": 19084917.17823438,
  "transactions": 49217478,
  "disk_size": 5201648608
}
gettxoutsetinfo
{
  "height": 743625,
  "bestblock": "000000000000000000025c4c50d6ec225b90f1d100fc31fd31f1543cb27f700b",
  "txouts": 82608545,
  "bogosize": 6164937399,
  "hash_serialized_2": "0b4c2b13d9ca59d09ee688c4135579e3c4a44f894af5a704b1c2afc23c174f14",
  "total_amount": 19084948.42823438,
  "transactions": 49218712,
  "disk_size": 5195808511
}

And then, some messages like that would make it more clear:

Code:

You have 100000000 satoshis. As of block 743620, there are 1908491717823438 satoshis in circulation. That means, you own 0.00000005239739793 coins in [0;1] range.
You have 100000000 satoshis. As of block 743625, there are 1908494842823438 satoshis in circulation. That means, you own 0.00000005239731214 coins in [0;1] range. Since block 743620 you lost 0.00000000000008579 coins in [0;1] range, because 3125000000 satoshis were mined in the meantime.

Then, they should click on "show tail emission", and see this kind of messages:

Code:

You have 100000000 satoshis. As of block 743625, there are 1908494843823438 satoshis in circulation. That means, you own 0.00000005239731211 coins in [0;1] range. Since block 743620 you lost 0.00000000000008582 coins in [0;1] range, because 3125000000 satoshis were mined in the meantime. You also lost 0.00000000000000003 coins in [0;1] range, because 1000000 coins were mined in a tail emission.

This means that only those who make transactions are those who fund the future reward.

That's another problem, but to get the full picture, you can add punishments in a reversed way than coinage: the older coins you have, the more coins you have to pay to move them. And to preserve old signatures, it should be possible to require paying as a fee, no matter who will pay that, so for example if some old address has to pay 0.01 BTC, then it should be checked globally on the coinbase level, to make it possible to delegate payment to someone else, without invalidating old signatures from old transactions.

Edit: Let's see how many decimal digits are needed to express that precisely enough:

Code:

totalSupply=2100000000000000
satoshi=1
fraction=0.00000000000000047619047619047619
totalSupply=2100000000000001
fraction=0.00000000000000047619047619047596

Yes, 32 decimal places seems to be a good choice for the start. But maybe reversed uint256 as a fraction would be better, or maybe some difficulty-like system, it is still an open question, how to display it easily, maybe storing amounts in satoshis and calculating it on the fly is the simplest solution, but still, there is a need to always display all fractions precisely enough to show, how it really works, because users should see, how their coins are affected by inflation, instead of seeing the same amounts and falsely thinking they don't lose anything from tail emission.

[Peter Todd]

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.

[garlonicon]

I sure don't care about spending 0.1% or 1% per year of my wealth to keep Bitcoin secure.

You are free to send coins to addresses like bc1qqph8gusf2x7ch4xjs8vnp7hy449r929wnv5jggmy678gam85l6rqgajus9. It has "1000000 OP_CHECKLOCKTIMEVERIFY OP_DROP OP_TRUE" script, so it can be claimed after a block 1000000 by any miner.

But I do care that everyone else also chips in so we don't have a tragedy of the commons.

So make it a soft-fork proposal, where N out of M coins are locked in every coinbase transaction, to cover future rewards. It will have higher chances of being deployed than any other hard-fork, and will also increase future mining rewards. You want to get a 0.01 BTC tail emission? No problem, just send 0.01 BTC to block 1000000, then 0.01 BTC to block 1000001, and so on.

So where are the examples?

What about RSK? Of course it is not an altcoin, but it works only on transaction fees.

Edit: It is also possible to raise funds for each block by encouraging people to join. Let's test it on testnet3:

Code:

02000000000101beee5a704e225ce3084f18efeed14b47c78dab989923bf302d407969f46060730000000000fdffffff0140420f000000000022002067dec8c93c964ebb8c907f559de42fc3348276e88ba037cf0e58b4d62ae10d25024730440220424ecafa5fc9a9cec7254211b663e209ff70fbcdcd207c39d48fea8fc0fe8457022000ac784bf2934523ff5f26e39d3b79d89ed660e1c16cb34d6309a681e5124a48832103c30ceb531aa44417234df50acd798b25c5cd6bb062b74700b5b30e0523624d8a00000000

It simply means: "I agree to donate my 0.00071000 tBTC to the block 2360000, if other people will also put their coins in, and we want to collect 0.01 tBTC as a tail supply for that block". And it can be done for each block number separately, no fork is needed. But if some soft-fork will be deployed, and if some current fees will be locked for the future, the effect will be the same. Of course, to fully implement tail supply as a soft-fork, getting single satoshis from hodlers is also needed, but that can be achieved by increasing their fees as a punishment, then they will have a choice: hodl and not pay anything, or move coins, and pay a tax called "tail supply".

[o_e_l_e_o]

It is all about proportions. You can have two systems

What you've described here is different to what you have described previously. Taking a fee from every address, proportional to the amount of bitcoin being held on each address, and attributing it to future blocks is very different to taking a proportion of the transaction fees and attributing those to a future block. The former is sustainable, as you are always taking the same proportion of the same amount of bitcoin (21 million), creating a constant tail emission. The later is unsustainable, as you eventually reach a point where x% of the fees from the current block that you are locking for the future is smaller than the x% of fees previously locked which can now be claimed. With this arrangement you would eventually reach the point where the whole network is secured by fees alone (albeit with a small proportion of those feels delayed to a later block), which is the very thing you start out by saying is unsustainable.

You either have to create new coins and breach the 21 million limit, or you have to siphon coins from somewhere other than the block fees.

[gmaxwell]

Let's suppose a truly devastating war somehow kills half of the global population.

I wouldn't be surprised if a dozen well placed high altitude EMP optimized nuclear bombs couldn't destroy access to substantially more than half of all coins without killing anyone (well, okay, killing some through long term fall out, but not directly).

It also doesn't have to happen all at once to result in totally distorted rates over time, though obviously all at once makes it worse. 4 25% loss events is a 70% loss.

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.

Not sure who you're responding to here, since nowhere did I say that AFAICT.

Again, there is no way that we can be "disruptively overpaying" with a tail emission approximately equal to what people lose by accident.

"Equal to what people lose by accident" is only an equilibrium reached after an unspecified, arbitrary, and potentially very long time.

...and yes, obviously the continued subsidy isn't guaranteed to be high enough to support security.

Right.  So what problem does it solve?   As far as we know today: none.  You can conjecture situations where some specific proposal might do something useful, but the concept as a whole doesn't by itself.  

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.

By the same argument you've made-- that the supply and circulating supply aren't fixed-- a tail subsidy cannot achieve any specific inflation rate.  

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.

The same argument could be made if it weren't viable without an additional "0.1%" subsidy: that if it doesn't work without it, there is a reasonable odds that it's not viable with it.

That's absurd. Overpaying isn't a concern when you're paying a tiny % of your wealth.

You've posted an overly technical argument that after an unspecified timeframe constant subsidy will eventually match coin loss.  Yet in this discussion you are acting as though your conclusion guarantees that the subsidy is a tiny % of your wealth,  it doesn't.  This is a slight of hand.   I get that you intuitively and informally believe that would be the case, and I would agree that it's possible for it to be the case.  But it is also unambiguously possible for it to be very much not the case.

build into it a massive long-term unknown in how we'll pay for security.

Which would also be true in the presence of tail subsidy, particularly if it's not set to a conservative rate to increase the confidence that the rate won't become unacceptable in the face of coin loss or economic contraction.

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.

People chip in when they transact.   How about spending 1% of your wealth to unnecessarily pay people to burn energy with no practical benefit to your security?  Or 0.1% of your wealth and still have the result be insecure?  And it's not just "everyone chips in"-- someone is profiting from this at your expense.  Again:  You argue as if its clear that a credible level of tail subsidy would have make a meaningful improvement to security-- we don't know that.  It might, or it might not.  Right now, as I pointed out, Bitcoin current fee income already produce income greater than the total subsided income for a number of altcoins which are going without attack.  While that's far from conclusive, it's evidence that a subsidy level of 0 may be currently viable.

If you were right, that'd still be happening in alt-coins. So where are the examples?

There have been many altcoin forks to change inflation rates, including several of ethereum's, as the highest profile and highest value example.  (there have been many others that have been forked to change the subsidy schedule, there was even an attempt to create a 50 BTC forever fork of bitcoin back around the first halving).

This entirely misses the point of the block subsidy. It is for *distributing* coins, the only way to bring coins into existence.

There are many possible ways to bring coins into existence.

The subject being discussed here is redirecting wealth from the existing users of the system in the long term in order to subsidize providing security to the system.

Is it desirable, much less moral, for a percentage of the world's wealth to be in the hands of some early whales?

Tail subsidy as discussed by the author of this article doesn't solve that except to the extent that it forever enshrines an additional industry in that privileged position.

That is just wishful thinking. Coin loss will never be arbitrarily small.
Any rules that guard against accidental loss are themselves a risk of abuse,

The potential for abuse can be irrelevantly small.

For example, allowing your coins to be spent by another party if they go 120 years-- which will cover the expected lifetime of the owner *and* their heir-- without moving appears to me to have an inconsequential risk for abuse (and the risk could be mitigated by making it somewhat longer).  And it would be economically rational for a very long lived entity to pay people small amounts to encumber their coins accordingly, and economically rational to accept those offers.

It's just not realistic to think that the yearly loss rate would ever drop below 0.01%. More likely it will remain above 0.1%.

I think I've given a completely realistic way that it could become extremely low.  I think it's inevitable that if bitcoin continues to be widely used that such schemes will be adopted at some scale, though I admit I'm less confident that they'd be universal.

offering an option for people to dedicate their long lost coins to development help fund future development

How would that even work technically? Coins whose keys have been lost cannot be moved...

At the time what I'd considered was writing far-future timelocked spends as soon as the coins were received and sending them off via tor to a host that collected them.  Though today that kind of thing is better accomplished by having an alternative spending path with a relative timelock on it.

If bitcoin had a fixed block reward of 600 since launch, then its emission of 1 coin per second forever would be recognized as the ultimately simple and fair emission. It would take 2-5 decades for its yearly supply inflation to become competitive with fiat, but what's the hurry? At least the high initial inflation rates would keep the speculators at bay, and bitcoin could focus on its *intended* purpose: use as a *currency*.

How's that been working out for you so far?    Speculation brings its own varrious annoyances, but it's an important part of adoption too.  I believe that a high inflation rate Bitcoin would never have taken off at all-- and, if anything, just been replaced by a low inflation coin.

It is, of course, impossible to prove such conjectures about alternative histories-- but as far as I can tell every high inflation rate altcoin  (or things with similar economic policy) have been total adoption failures so far.  I can't attribute this to Bitcoin's first mover advantage because they've been unsuccessful compared to other bitcoin alternatives not just bitcoin, including when they had more to offer.

I take it you would argue that this trend will reverse in the long term.  I doubt it: I think network effect is more important than jealousy (not that this doesn't conflict with the above: network effect doesn't happen until something is already successful).  It's just a fact of life that the people that came before you had myriad opportunities you missed.  Imagine how wealthy you could have if you bought apple shares in 1985 and held it till today, San Francisco real-estate in 1982, or traded your silver for gold in the year 1200?

[And you could apply this argument to real estate-- $/acre can differ by 1000 fold based on just the network effect of people already in a location.  Those who were there first are enriched by this.  People could abandon the high price place and go elsewhere-- they do to some extent, but seldom enough to change which places are expensive and which places are cheap.]

Economic activity diffuses wealth over time-- particularly if some systematic effect isn't sticking it back in the hands of the few as our central banks do today or as tail subsidy might in some cryptocurrency schemes. It might not diffuse as quickly as we might like.  The OP's argument was fine with reasoning about the state of the system arbitrarily far in the future: if we adopt that approach we can argue it doesn't even matter how the wealth was initially distributed, since at some arbitrarily far point in the future it won't matter.  But that doesn't hold true in the presence of tail subsidy:  Tail subsidy will always continue to enrich the mining industry (and those close to it in the economy) at the expense of everyone else, creating a "winner" that can't be displaced by diffusion.

[tadamichi]

This entirely misses the point of the block subsidy. It is for *distributing* coins, the only way to bring coins into existence.

Is it desirable, much less moral, for a percentage of the world's wealth to be in the hands of some early whales?

How would tail emissions solve distribution? As whales with that much economic power will be able to acquire more mining equipment/ can afford the best suited locations and then getting more subsidies additionally. This could actually have the opposite effect, more concentration of wealth in the hands of early whales, than without tail emissions.

Absolutely not. If in 2140 when the last satoshi is mined, we look back at how all the bitcoin in existence have been distributed, then only 0.4% have been distributed in the prior 100 years, across 5 generations. That makes little sense economically.

As Bitcoin grows in adoption, hodling will bring less and less gains, forcing these old hodlers to participate in actual economic activity/ spending if they want to benefit from their wealth, which will jump start redistribution even without tail emissions.

It's also completely different from how gold mining behaves, which to a first degree has a linear emission in our lifetimes. Would you characterize gold mining as undesirable and immoral?

The problem might be the cost of mining in the future, making it too expensive for locations without close to 0 energy costs. If mining will be too centralised, a tail emission might not impact security as much, as it doesnt matter if the same small group of miners can afford to run more machines. And it might not actually be able to allow for better distribution of mining in the first place.

[garlonicon]

You either have to create new coins and breach the 21 million limit, or you have to siphon coins from somewhere other than the block fees.

Getting coins from other place than transaction fees means that you have to take them from the hodlers. And that can be done by using reversed coinage: you can check, in which block number some coin was created, and take a fee based on the number of confirmations. So, if you want to take one satoshi per 0.01 BTC from everyone, then if someone has 1 BTC, it means taking 100 satoshis per block. So, that means all coins will be taken after 1000000 blocks. That means, on average after 10 million minutes (around 19 years), each hodler will lose everything. Then, that hodler will have a choice: sign those coins, and send them as fees, or not sign those coins, and effectively get them excluded from the circulation.

So, that simple example means that getting a fixed tail supply fee as a single satoshi per 0.01 BTC in every block is too much. You can change amounts, make it percentage-based, again, it is all about proportions.

Edit:

As Bitcoin grows in adoption, hodling will bring less and less gains, forcing these old hodlers to participate in actual economic activity/ spending if they want to benefit from their wealth, which will jump start redistribution even without tail emissions.

That's not true. If you are a miner of block number one, you have 50 BTC. And there are only 50 BTC in existence, so you have 100% of the coin supply. Then, over time, you have less and less percent of the supply, until reaching the total fixed supply, then you have a constant fraction of the supply. Later, coins are lost or burned, so if you still have your keys, then you have bigger and bigger fraction of all coins. So, hodling Bitcoin is a long time strategy that always works by design.

But if there would be tail emission, then it would be the same as with fiat currencies: we would start with 21 million coins. Then people would find out, that "we need more coins, because <put anything here>". And then, more coins will be produced. Then, people will come and say: "this is still not enough". So, there will be endless "bailouts", not for banks, but for miners this time, and we will return to the point when we started, so burning coins will be proposed as a solution, because "hey, we have more coins, and the situation is not better, let's burn some of them, to make our coins worth more". And regular coin burning is what you can see on many altcoins.

[tadamichi]

That's not true. If you are a miner of block number one, you have 50 BTC. And there are only 50 BTC in existence, so you have 100% of the coin supply. Then, over time, you have less and less percent of the supply, until reaching the total fixed supply, then you have a constant fraction of the supply. Later, coins are lost or burned, so if you still have your keys, then you have bigger and bigger fraction of all coins. So, hodling Bitcoin is a long time strategy that always works by design.

It works, but then the limit is how long you are alive, there will be enough people bringing coins in circulation and if they dont, it wont impact the economy, as they’re like lost coins for the time theyre not being used. Its unrealistic to think that a human will never spend/ invest any considerable amount of money in their lifetime, when they have the opportunity to do so. And if theres a few people who saved till the end of their lifes, then idk if theres a justification for devaluing their wealth artificially, just because of this.

Also i get that inflation is an economic tool to incentivise spending, but we shouldnt act like it doesnt work without it. No inflation works as an incentive for wiser spending, and i prefer this alternative as its something the world could really need.

But if there would be tail emission, then it would be the same as with fiat currencies: we would start with 21 million coins. Then people would find out, that "we need more coins, because <put anything here>". And then, more coins will be produced. Then, people will come and say: "this is still not enough". So, there will be endless "bailouts", not for banks, but for miners this time, and we will return to the point when we started, so burning coins will be proposed as a solution, because "hey, we have more coins, and the situation is not better, let's burn some of them, to make our coins worth more". And regular coin burning is what you can see on many altcoins.

Could possibly happen, but then a coin with fixed supply might attract more people again, just like now.

[tromp]

How's that been working out for you so far?

Grin, at 3.5 years since launch, is only 3.5% into its soft total supply [1].
Compare that to Bitcoin, which at 3.5 years after launch was already 44% into its total supply,
Or to Monero, which was already over 80%.
Grin's emission is over an order of magnitude slower than any other coin.
So yeah, it will do miserably on marketcap for many more years to come.

Bitcoin reached the same 3.5% of its total supply in less than 3.5 months,
distributing only to a handful of people, and trading for fractions of cents.

I don't measure Grin's success by its marketcap, but by its elegance, simplicity [2], scalability, and long term survival.
For the short term, it may be only of academic interest in a crypto world that's rather dominated by speculation.

Tail subsidy will always continue to enrich the mining industry (and those close to it in the economy) at the expense of everyone else, creating a "winner" that can't be displaced by diffusion.

You have this weird idea that a coin's distribution is split into  a later phase of distribution to the "mining industry" which is enriching itself, preceded by an earlier phase of distribution to "everyone else", who are now being unfairly diluted.
Never mind that in Bitcoin "everyone else" were receiving much larger block rewards at much lower effort.

The "winner" that can't be displaced by dilution in their lifetime is Satoshi, not some tail mining operation that in a competitive market makes a few % profit at best and would need many lifetimes to match Satoshi's stack.

Miners are simply the mechanism that helps to fairly distribute coins to more people, and in Grin's case to more generations of people.

[1] https://john-tromp.medium.com/a-case-for-using-soft-total-supply-1169a188d153

[2] https://www.reddit.com/r/CryptoTechnology/comments/kyhgcv/are_there_any_public_cryptocurrencyblockchain/

[oryhp]

But that doesn't hold true in the presence of tail subsidy:  Tail subsidy will always continue to enrich the mining industry (and those close to it in the economy) at the expense of everyone else, creating a "winner" that can't be displaced by diffusion.

I don't see how this isn't true for Bitcoin's model as well. This miner "enrichment" seems to be a function of security in $ value.
It doesn't matter whether the miners get their reward from the block subsidy, transaction fees or a combination of both. If you end up with a secure PoW system, then you must be enriching miners.
As far as I can tell, the only difference is that Bitcoin's long term plan is to do this only through transaction fees. The assumption is that we'll have a constant backlog of high fee paying txs that will substitute the vanishing block subsidy.
Even if this turns out to be correct, the miner reward will stay the same (assuming the same security). I'd argue the fee-only model might be worse on that front because transaction fees directly transfer value from the existing
users to the miners while block subsidy prints new coins. Unless I'm missing something, the latter seems to be less of an enrichment.

[tadamichi]

I don't see how this isn't true for Bitcoin's model as well. This miner "enrichment" seems to be a function of security in $ value.
It doesn't matter whether the miners get their reward from the block subsidy, transaction fees or a combination of both. If you end up with a secure PoW system, then you must be enriching miners.
As far as I can tell, the only difference is that Bitcoin's long term plan is to do this only through transaction fees. The assumption is that we'll have a constant backlog of high fee paying txs that will substitute the vanishing block subsidy.
Even if this turns out to be correct, the miner reward will stay the same (assuming the same security). I'd argue the fee-only model might be worse on that front because transaction fees directly transfer value from the existing
users to the miners while block subsidy prints new coins. Unless I'm missing something, the latter seems to be less of an enrichment.

There is one small difference, the block subsidy affects the circulating supply. It doesn’t matter if the total circulating supply stays under 21 million, or doesnt inflate, for this effect to take place.

As a non-miner:

• If the circulating supply increases, your piece of the pie decreases over time in this model(tail emissions).
• If the circulating supply stays constant, you missed out on some increasing value you would have gotten otherwise from deflation.
• If the circulating supply decreases, your increase in value would have been less than otherwise.

This affects all coins ever created regardless if they get used or not. In this scenario miners get enriched and have a kind of cantillon effect playing into their favour. Transaction fees might depend more on the fact that blocksize is limited and would be high anyways due to the limited space, this wouldn’t be lessened trough tail emissions. Just because we’re paying miners subsidies doesn’t mean we get cheaper fees. So i would argue tail emissions is the bigger enrichment, but the real downside is what i listed above. It affects monetary properties directly.

The Transaction fees only model doesn’t have this, that is the advantage, it’s not the enrichment that would be the danger. Even small changes can have big effects over longer periods of time.

And then we don’t even know if tail emissions would even be enough in the end. But if we as a community open the doors to trying to print our problems away, then people in the future might be tempted to take it even further. The best solution would be transaction fees only, if we want to keep Bitcoin the soundest money possible. It won’t be impossible to compensate miners when the most sound money in the world depends on it. So in my opinion keeping the original properties is more important, than trying to lessen some uncertainties now.

[vjudeu]

And again, Paul Sztorc was right. But I didn't expect that any Bitcoin users will go into violating the limit that fast: https://www.truthcoin.info/blog/security-budget-ii-mm/#f-the-trilemma

[NotATether]

It is all about proportions. You can have two systems:
1) with fixed supply, where everyone will lose some satoshis in explicit way, and they will be taken by miners, because of tail emission
2) with infinite supply, where everyone will lose some satoshis in obscured way, because miners will be always rewarded by new coins, because of tail emission

Maybe you can't see that, so I will try to make some more extreme example, you can adjust numbers to reach some real-life scenarios:

Imagine there are 21 million coins, distributed to many different users, and the block reward is zero. Then, imagine that 21 million coins are produced, because of tail emission. Then, you can have two systems:
1) with fixed supply, where everyone will lose half coins in explicit way, and they will be taken by miners, because of tail emission: 10.5 million coins will remain in users' hands, 10.5 million coins will be taken by miners, 21 million coin limit is untouched
2) with infinite supply, users will have exactly the same amounts, but they will be worth 50% less than before, because miners will be always rewarded by new coins, because of tail emission

Which one of these would be desireable to the people, if they had to choose between them? Of course, it would be the first alternative, because nobody likes their supply converging towards infinity, hence the value of a single coin converging to 0, because this assumes that all users will continuously be subsidised by equal amounts (scams and theft alone prevent this from being possible); Just ask DOGE developers how that enterprise is doing.

And again, Paul Sztorc was right. But I didn't expect that any Bitcoin users will go into violating the limit that fast: https://www.truthcoin.info/blog/security-budget-ii-mm/#f-the-trilemma

I personally do not mind if the transaction fees soar exorbiantly high as long as the LN is in a standardized state by then. And at the very least, I'd like for Bitcoin Core software in the distant future, to create an LN implementation inside the daemon based on the common standard - and then all standardness problems will be solved for good. If someone goes out right now and makes another client, you just create the N+1 problem. What has to be done is to build a library based on strigent security measures, and then convince core developers to use that (like libsecp256k1: In fact, libbitcoin the consensus rules library is built as such a target. I don't see why a liblnconensus is not possible as well.)

[stwenhao]

I am surprised that this topic grabbed that much attention. But if that's the case, then in this triangle we can see three scenarios:

1) block size increase, a huge attack, it should be solved by compression, to be stopped once and for all, if not, then block size will be always increased, causing future problems
2) violate coin limit, another huge attack, it should be stopped by burning all coins created by the attackers
3) merged mining, it should be deployed correctly (not like NameCoin, there should be a single chain of the heaviest headers that all coins are attached into), that would stop two previous attacks

What has to be done is to build a client based on strigent security measures, and then convince core developers to use that.

True, sidechains based on this idea are ongoing: https://lists.linuxfoundation.org/pipermail/bitcoin-dev/2022-June/020532.html

[tromp]

nobody likes their supply converging towards infinity

Your statement can be rephrased as "nobody likes their share of the pie to be decreased".

At first sight, that's seems obvious.

But on closer inspection, it's not so obvious.

For the pie to be useful, you want as many people as possible to have some share.
And you want this pie to be more attractive to people than some other pie.

So you don't want the pie ownership to be too concentrated. Maybe, if you believe in fairness,
you want future generations to have some share of the pie as well.

That's why you want the supply to keep growing. Preferably not by too much though. Just a percent or two per year.
That makes you not lose too much of your share while allowing many more people their fair share....

[NeuroticFish]

nobody likes their supply converging towards infinity

Your statement can be rephrased as "nobody likes their share of the pie to be decreased".

At first sight, that's seems obvious.

But on closer inspection, it's not so obvious.

For the pie to be useful, you want as many people as possible to have some share.
And you want this pie to be more attractive to people than some other pie.

So you don't want the pie ownership to be too concentrated. Maybe, if you believe in fairness,
you want future generations to have some share of the pie as well.

That's why you want the supply to keep growing. Preferably not by too much though. Just a percent or two per year.
That makes you not lose too much of your share while allowing many more people their fair share....

I've thought the same in the rather early days of Dogecoin: tail emission gives everybody the chance get hands of the coin, tail emission makes it much more suitable for being an actual currency since in every currency money lost do happen.
However, in those days Dogecoin price went down and no recovery seemed to be at the horizon (I never expected the 2021 comeback, but I still don't know if it was good or just manipulation).
Now I consider Dogecoin tail emission overly big.


Is tail emission good? Maybe, but it's overly difficult to get it right. Bitcoin is better as investment and only time will tell if its lack of tail emission is a real problem or not. For now we're okay and in the near future the existence of 8 digits after the decimal point can do the job. Then we (or actually one of the next generations) will see...

[tromp]

Now I consider Dogecoin tail emission overly big.

So you have a problem with Dogecoin's yearly inflation rate, but not with its wealth concentration?

[NeuroticFish]

So you have a problem with Dogecoin's yearly inflation rate, but not with its wealth concentration?

It was an example based on a coin I knew. Right now I don't care at all neither about Dogecoin's tail emission, nor its wealth concentration.
My point was that it's hard to get tail emission right.

[tromp]

My point was that it's hard to get tail emission right.

If there is only one way to get it right, then it would be tail emission from launch.
In gmaxwell's words, that's a pretty strong attractor in the design space, with nothing arbitrary about it.

It's the most fair possible coin distribution.
Which is exactly why many (most?) people don't like it, because they want to have an edge over later adopters.
In that way, Grin is the only altruistic coin...