Nonsense about increasing the 21M supply cap

[Synchronice]

However, it is also clear that the Bitcoin price cannot more than double every four years for all time. This means that fees are becoming increasingly important for miners. This contradicts the decentralized structure of Bitcoin.

How do we escape this dilemma?

This is what I love about Bitcoin Mining, PoW is perfect. If the mining difficulty is high, it becomes unprofitable to mine but it becomes profitable when others shut down their miners. On the other hand, mining is always profitable but not for everyone. The one who will turn their miner for the longest time, will mine with profit.
By the way, it's natural that miners will soon be dependent on fees than on block reward but I don't understand how that contradicts with Bitcoin's decentralized nature.

If Bitcoin removes the 21 million supply cap, will it still be called bitcoin?

I mean if the miners agree with the proposal and increase the supply limit to a higher number, technically it will still be bitcoin because the miners have the power to change the network rules.

But how many people will accept it?

I think a decision like that would make so many people angry.

I don’t think it is a good idea.

For me, as a Bitcoin holder, it will be very unfair. It should be very unfair for every Bitcoin holder and Bitcoin related business, for every Bitcoin user because by changing the supply limit, they are changing the fate of probably, millions of people. It's not fair and it should never be done. There is a limited supply for a very valid reason.

[philipma1957]

I still frozen coins will get confiscated and reused/


Maybe after 50 years of an address not having a coin moved out of it, it gets forfeited and pushed  back into rewards.

BTW if it is done and blocks are revitalized say in 2059.

The issues goes by by without much of an issue.

Lets pretend that 2009 coins 200,000 are frozen/lost

in 2059

2009 50
2012 25
2016 12.5
2020   6.25
2024   3.125
2028   1.56250
2032   0.78125
2036.  0.390625
2040   0.1953125
2044   0.09756525
2048   0.048828125
2052.  0.02441406
2056   0.01220703
2060   0.00610351 becomes 1.00610351 coins a block for 5 years.


so we do around 52560 blocks a year if we recover 250,000  lost coins from 2009

you could add 1 coin per block  get 5 years.


So a recovery of lost coins form just 2009 in 2059 or 2052  fixes the issue for years.

It's a simple fix.  I think they will do some variation of this.

[ranochigo]

I still frozen coins will get confiscated and reused/

Maybe after 50 years of an address not having a coin moved out of it, it gets forfeited and pushed  back into rewards.

This goes against the philosophy of Bitcoin. Forfeiture of assets shouldn't be an option even if it has never been touched or stayed dormant for the past century. There is also a problem with an arbitrary threshold where there isn't a good way to determine how long the coin should stay dormant before being recirculated. This would pose far too much of an issue in terms of both implementation and motivation. Even if you start to recycle OP_Return outputs, the purpose of sending them by the original owner would be defeated.

Between this and implementing a tail emission of sorts, I'd support tail emission. There shouldn't be a scenario where an asset gets confiscated because it lays dormant.

[tiffy]

so we do around 52560 blocks a year if we recover 250,000  lost coins from 2009

you could add 1 coin per block  get 5 years.


So a recovery of lost coins form just 2009 in 2059 or 2052  fixes the issue for years.

It's a simple fix.  I think they will do some variation of this.

Now I want to ask you people here one more time:

Why isn't an additional Proof-of-stake layer being discussed?

I understand that SHA256 mining is important during the distribution process.

But if everything or almost everything is distributed, SHA256 mining simply becomes a validation whose thermodynamic maintenance depends on the transactions themselves that are to be validated.

You then have to expand the money supply. You can call it "recycling" of "lost" coins, but in economic terms it is an expansion of the money supply.

In my opinion, an additional Proof-of-stake layer would be economically less intrusive. The reward could still go 100% to the remaining SHA256 miners. But the transaction fees could be partially distributed to Proof-of-stake validators.

[pooya87]

However, it is also clear that the Bitcoin price cannot more than double every four years for all time. This means that fees are becoming increasingly important for miners.

Since price is already going a lot higher than the reward is reducing, it is clear that fees are not becoming important yet. There is no indication that they will become important in the near future either. That's the problem with this type of arguments, people are speculating about something that hasn't happened and we have no evidence of how it will happen.

This contradicts the decentralized structure of Bitcoin.

I do not get it, why do you believe Mining becoming increasingly important for Miners will lead to a contradiction in the Decentralized structure of Bitcoin? 

I didn't write that. I wrote that fees are becoming increasingly important for miners. The increase in fees means less decentralization because the miners become more dependent on the users.

[/quote]
That does not contradict decentralization.

If the fees exceed the reward, is it possible to add a proof-of-stake layer for validation?

No because PoS is fundamentally flawed and is a terrible protocol. And I personally believe that if we wanted to change the mining algorithm in any way, we should find a new and proper algorithm to replace it with not something broken just because it looks like the easiest solution.

[ranochigo]

Now I want to ask you people here one more time:

Why isn't an additional Proof-of-stake layer being discussed?

I understand that SHA256 mining is important during the distribution process.

But if everything or almost everything is distributed, SHA256 mining simply becomes a validation whose thermodynamic maintenance depends on the transactions themselves that are to be validated.

There is no point for a second layer. Consensus should be reached on a single blockchain, and there is no point in having an additional PoS layer because it wouldn't serve any purpose at all. Mining is important during the entire lifecycle of a blockchain, because it ensures that entities in a blockchain are incentivised to act honestly. This is done by giving up resources in exchange for a reward, ie. energy, ASICs, etc. In PoS, you lock your funds and use your funds as a sort of guarantee that your chain is honest.

Mining does not validate transactions, miners mine blocks to build ontop of the blockchain and the transactions validation is done by every single node (including the nodes that miners are running). Anyways, what's a thermodynamic maintenance?

You then have to expand the money supply. You can call it "recycling" of "lost" coins, but in economic terms it is an expansion of the money supply.

In my opinion, an additional Proof-of-stake layer would be economically less intrusive. The reward could still go 100% to the remaining SHA256 miners. But the transaction fees could be partially distributed to Proof-of-stake validators.

It is widely assumed that Bitcoin's supply cap will not be changed, and that is the general philosophy behind Bitcoin. Certain other characteristics are also implied; ownership should not be transferred without permission.

Additional PoS layer is again, redundant and there is no purpose for it. Additional supply beyond what's agreed upon is likely not supported by the community, and it would just become another shitcoin.

[tiffy]

No because PoS is fundamentally flawed and is a terrible protocol.

I don't understand enough about that. You can also replace PoS with a protocol that has yet to be found.

In 20 years Biotcoin must be worth several million to be as safe as it is today. Or the fees or the transactions have to increase significantly. We know where the reward will be in 20 years' time. But we don't know how many transactions there will be then. I would guess not dramatically more than today.  

Mining does not validate transactions, miners mine blocks to build ontop of the blockchain and the transactions validation is done by every single node (including the nodes that miners are running). Anyways, what's a thermodynamic maintenance?

Perhaps thermodynamic protection would be a better phrase. I don't know. Be that as it may SHA256 forces the use of energy that can hardly be reduced. Correct? I don't know how I could calculate SHA256 with significantly less electrical energy than Bitcoin computing systems do today. I think it is very secure today.

But if there are fewer and fewer rewards, the price only increases by a few percent a year and not much more comes in via transaction fees, then this may change over time. Or am I making a logical mistake?

Of course you can say, what do I care what happens in 15, 20 or more years' time? I personally like to think about things like this from time to time. But I understand that you are not interested in the subject. There are no problems at the moment.

[ranochigo]

I don't understand enough about that. You can also replace PoS with a protocol that has yet to be found.

In 20 years Biotcoin must be worth several million to be as safe as it is today. Or the fees or the transactions have to increase significantly. We know where the reward will be in 20 years' time. But we don't know how many transactions there will be then. I would guess not dramatically more than today.  

I find this issue to be more about the economic aspect, and less about the technical aspect. Most consensus mechanisms that crypto runs on are actually based on the very same game theory aspect; giving up one thing in return of another. Miners in a PoS system might be less inclined to stake their funds if they're going to receive less rewards, think of it as a fixed deposit, where the opportunity cost is higher when locking your funds in than the rewards. Replacing Bitcoin with another mechanism is unlikely to solve the issue.

In a similar vein, Bitcoin's deflationary design is intentional, and recycling old coins is not going to solve the issue. Changing the design entirely, either by unlimiting the supply or stealing some coins will violate the entire philosophy of Bitcoin. These kinds of ideas are best left to an alternative crypto, aka. altcoin.

Perhaps thermodynamic protection would be a better phrase. I don't know. Be that as it may SHA256 forces the use of energy that can hardly be reduced. Correct? I don't know how I could calculate SHA256 with significantly less electrical energy than Bitcoin computing systems do today. I think it is very secure today.

Calculating SHA256 is extremely trivial, in fact it takes nanoseconds for miners today to calculate a single hash (actually even faster). if you're talking about the energy consumption of the speeds at which miners are calculating hashes, then yes it probably cannot be reduced significantly.

But if there are fewer and fewer rewards, the price only increases by a few percent a year and not much more comes in via transaction fees, then this may change over time. Or am I making a logical mistake?

That's correct, because difficulty, or the amount of "work" is also a function of the revenue gained from the margin. I'm more inclined to think that this isn't as big of an issue as it seems because Bitcoin's network is generally secure enough even if some miners were to find it unprofitable to mine in the future. Prices are likely to rise for more than a few percent YoY, because deflationary forces are at play assuming a more limited supply. Revenue from TX fees can increase in the future if we can increase network throughput in a way or another.

In comparison with changing the entire consensus mechanism of Bitcoin, I'm inclined to think that these potential improvements over time makes the issue less significant.

Of course you can say, what do I care what happens in 15, 20 or more years' time? I personally like to think about things like this from time to time. But I understand that you are not interested in the subject. There are no problems at the moment.

Generally, I think its a worthwhile discussion if we're able to find realistic proposals that can potentially replace PoW and PoS in the consensus scheme. These are topics that are discussed previously and the outcome is usually that they aren't all that good and it wouldn't make sense for Bitcoin to switch. In fact, as it stands, we don't have a comparable consensus mechanism and it would likely face too much complexity to attempt a switch, for an issue that likely doesn't exist.

[Wind_FURY]

If Bitcoin removes the 21 million supply cap, will it still be called bitcoin?

If you haven't learned anything, "Bitcoin" is what will have community/network consensus.

No because PoS is fundamentally flawed and is a terrible protocol. And I personally believe that if we wanted to change the mining algorithm in any way, we should find a new and proper algorithm to replace it with not something broken just because it looks like the easiest solution.

"Flawed" in that it's compared to have "the same" security model as Bitcoin - an acceptable conclusion. But calling it "terrible" might be too much. POS merely has different trade-offs and security assumptions for those networks that don't need Bitcoin's security model.

But for those people who would suggest that POS will be good for Bitcoin because "reasons", you are laughable.

[pooya87]

In 20 years Biotcoin must be worth several million to be as safe as it is today. Or the fees or the transactions have to increase significantly. We know where the reward will be in 20 years' time. But we don't know how many transactions there will be then. I would guess not dramatically more than today.   

20 years is a very long time from technology perspective. Just look at 20 years ago and the advances we have today compared to then (bitcoin didn't even exist back then). The advances are also getting faster, not to mention some of the cryptography algorithms will have been obsolete by then.

[ABCbits]

Now I want to ask you people here one more time:

Why isn't an additional Proof-of-stake layer being discussed?

--snip--

In my opinion, an additional Proof-of-stake layer would be economically less intrusive. The reward could still go 100% to the remaining SHA256 miners. But the transaction fees could be partially distributed to Proof-of-stake validators.

If you mean something like layer 2 or sidechain, it's already exist. Here are few examples,
https://thebitcoinmanual.com/blockchain/spiderchains/
https://www.cryptopolitan.com/mintlayer-layer-2-side-chain-of-bitcoin/

In addition, some protocol (such as Babylon) let you perform staking on altcoin by locking your Bitcoin.

[Hagart]

Who is BlackRock to tell someone what to do? Now it turns out that the Bitcoin story is going to have to change because BlackRock "believes" that it is best to increase the total supply?

Bitcoin doesn't need BlackRock, the Bitcoin community doesn't need BlackRock either. BlackRock can create their own coin with whatever total supply they want, I personally don't care.

After all, BlackRock in this case only talks about money and nothing else. Who needs BlackRock and those brilliant opinions...

[Floxynice]

Who is BlackRock to tell someone what to do? Now it turns out that the Bitcoin story is going to have to change because BlackRock "believes" that it is best to increase the total supply?

Bitcoin doesn't need BlackRock, the Bitcoin community doesn't need BlackRock either. BlackRock can create their own coin with whatever total supply they want, I personally don't care.

After all, BlackRock in this case only talks about money and nothing else. Who needs BlackRock and those brilliant opinions...

This game should be about numbers. Is BlackRock not the ones that made the bitcoin price climb to $50,000 during the ETF event. And with what I read about them, they are trusted by the people and they cam into the market with good numbers, so they have a say in influencing the market even if they are not the bitcoin developers.
But I don't think that bitcoin will remain powerful if it unfixes its supply.

[mindrust]

I mean if the miners agree with the proposal and increase the supply limit to a higher number, technically it will still be bitcoin because the miners have the power to change the network rules.

But how many people will accept it?

let's say a supply increase does happen, and most miners are on board with it, they will be shooting themselves in the foot. just imagine the price crash that would follow, which in turn, will lower their earnings a lot.
i mean, why would anyone continue holding/investing in an asset whose supply keeps increasing?

and how much are they going to increase it by? because if they don't make the supply unlimited, they will have to increase it again, and again, and again... it will become a joke.
no one with a brain would accept this nonsense. the shitcoin they will create will be dead on arival.

I don’t really understand why it matters that much anyway. It is just a comma moving to the right a few digits. Since bitcoin isn’t exactly a physical item, is inflating it with a few more zeroes gonna change its purchasing power? I can’t see that happening because Everybody will have the same share percentage in the end. It will be like a stock split.

When a stock gets “too high” against the USD it usually splits so the entry barrier to invest becomes lower (which doesn’t mean much nowadays because most brokers allow to purchase fractions of a share) , the calculations become easier.

Maybe we need to see it that way but then bitcoin is not a stock.

Anyway it will sort itself out one way or another.

If Bitcoin removes the 21 million supply cap, will it still be called bitcoin?

I mean if the miners agree with the proposal and increase the supply limit to a higher number, technically it will still be bitcoin because the miners have the power to change the network rules.

But how many people will accept it?

I think a decision like that would make so many people angry.

I don’t think it is a good idea.

For me, as a Bitcoin holder, it will be very unfair. It should be very unfair for every Bitcoin holder and Bitcoin related business, for every Bitcoin user because by changing the supply limit, they are changing the fate of probably, millions of people. It's not fair and it should never be done. There is a limited supply for a very valid reason.

That’s what I am talking about. Lots of people don’t even understand what “raising the supply cap” exactly means. It doesn’t mean they will create btc out of nothing and put the coins in their own wallets.

When the supply cap raises, everybody’s share percentage in the network will stay same.

At least that’s how I think it will be, if it ever happens.

Then, (again if that ever happens) I don’t see how it will be unfair to anybody.

[d5000]

Why isn't an additional Proof-of-stake layer being discussed?

I think an additional layer may be indeed a good option, but to solve the problem which is described in the OP, it should be a proof-of-work layer with tail emission.

We could have two different models which already in part exist today:

- the Namecoin/"Dogelitecoin" model: Blockchains which store transactions of a completely independent cryptocurrency, but can be merged mined with the main cryptocurrency ("Dogelitecoin" refers to Dogecoin being merge mined with Litecoin, which enhances both chain's security significantly, while Namecoin is still merge-mined with Bitcoin but the security improvement is quite small now due to NMC's low value/marketcap)
- the Drivechain / pegged sidechain model: a sidechain whose main purpose is to store and process Bitcoin transactions, or more precisely, transactions of a token pegged 1:1 to Bitcoin via two-way peg. The layer would have an auxiliary utility token merge-mined with bitcoin, with tail emission.

A proof-of-stake layer would not enhance Bitcoin's security at all, because miners and stakers are not the same group, and proof-of-stake validation of a sidechain doesn't protect at all against layer-1 51% attacks. In contrast, the merge-mining model does improve it, as it ensures additional income for miners providing funds to increase the hashrate.

If what you mean is a PoW/PoS hybrid Layer-1 blockchain the situation changes perhaps (there were several proposals, including Ethereum's Casper FFG and the even older "Slasher" protocol), but PoS depends heavily on the "weak subjectivity" paradigm, which means that new participants need a trusted source for their first connection to the network, weakening the decentralization of the whole system. PoW + PoS isn't a simple equation, as PoS provides another "type" of security than PoW.

[Wind_FURY]

OK, instead of increasing the 21 million Supply Cap, what's everyone's personal opinion on the "NAT token"?

Our mission is to redefine the Bitcoin mining incentive model by directing newly generated $DMT-NAT tokens to miners who win blocks, using the principles of Digital Matter Theory. This initiative aims to ensure a long-term, sustainable mining economy and to maintain the security and decentralization of the Bitcoin blockchain as the subsidy decreases.

https://natgmi.com/

Technically, I haven't DYOR yet, but their F.A.Q. posts that NAT is a "mining reward" based on Bitcoin's difficulty metrics. NAT is a BRC-20 token, which is a little disappointing if you ask me. Runes Protocol would be better for onchain tokens in Bitcoin.

But let's make a presumption that there's a very liquid market for NAT, would it be a concept that the Bitcoin community be ready to accept for the network to continue paying for security?

[pooya87]

OK, instead of increasing the 21 million Supply Cap, what's everyone's personal opinion on the "NAT token"?

We don't need someone exploiting the Bitcoin protocol and spam the blockchain to create on-chain garbage calling it a "token" just to incentivize miners. If bitcoin's PoW miners wanted more money they could always do merged mining where they get the reward for an actual altcoin and sell that for incentive. That is a much cleaner way without needing to spam the chain and they'd be mining another cryptocurrency that may have some utilities as well.

[ABCbits]

OK, instead of increasing the 21 million Supply Cap, what's everyone's personal opinion on the "NAT token"?

--snip--

But let's make a presumption that there's a very liquid market for NAT, would it be a concept that the Bitcoin community be ready to accept for the network to continue paying for security?

Since there's no serious plan to block BRC-20 or make BRC-20 non-standard, this token doesn't really need acceptance from Bitcoin community. As for my personal opinion, i expect no mining pool would bother to mint this NAT token since they need to modify their software.

[d5000]

I looked a bit into the NAT Gitbook. In addition to what pooya87 already wrote, it seems that everybody can mint these NATs, only that there is some kind of distribution to miners too. This looks simply like another typical BRC-20 project trying desperately to simulate some "unique" property but in reality the founders are "minting" most of the tokens and then will be ready to artificially manipulate the price.

Yep, merged mining is a much better option if you want to support Bitcoin miners. A well designed merged-mined altcoin with tail emission and without any premine would be a part of a possible solution. An idea could be simply an EVM-compatible, non-premined coin (there are very few of this kind, and to my knowledge none at all is listed at an exchange currently).

[Wind_FURY]

OK, instead of increasing the 21 million Supply Cap, what's everyone's personal opinion on the "NAT token"?

We don't need someone exploiting the Bitcoin protocol and spam the blockchain to create on-chain garbage calling it a "token" just to incentivize miners. If bitcoin's PoW miners wanted more money they could always do merged mining where they get the reward for an actual altcoin and sell that for incentive. That is a much cleaner way without needing to spam the chain and they'd be mining another cryptocurrency that may have some utilities as well.

The problem is, which coin should be merged mined by the miners? I believe there was Namecoin which used the same SHA-256.

Plus for your "spam" debate, we have talked about this before. Bitcoin as a permissionless system, what you call as spam, for other users it's not. They're following the consensus rules, how could anyone say that they're way of using Bitcoin is wrong and ours is right?

Personally, I'm agnostic, and for learning's sake I like exploring it, and its possible potential to do good for Bitcoin. I have taken a liking for on-chain shitcoining with Runes as well.

  ¯\_(ツ)_/¯

I looked a bit into the NAT Gitbook. In addition to what pooya87 already wrote, it seems that everybody can mint these NATs, only that there is some kind of distribution to miners too. This looks simply like another typical BRC-20 project trying desperately to simulate some "unique" property but in reality the founders are "minting" most of the tokens and then will be ready to artificially manipulate the price.

Yep, merged mining is a much better option if you want to support Bitcoin miners. A well designed merged-mined altcoin with tail emission and without any premine would be a part of a possible solution. An idea could be simply an EVM-compatible, non-premined coin (there are very few of this kind, and to my knowledge none at all is listed at an exchange currently).

Everyone? I will ask the people behind the project.

This is from their website.

What is the total supply of $NAT?

The supply of $NAT is determined by mathematical principles derived from Digital Matter Theory, ensuring a non-arbitrary distribution model.

https://natgmi.com/