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Question: Should we change the protocol for block mining reward payout?
Keep payout reduction every 210k blocks
Change to continuous 50 coin payout indefinitely

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Author Topic: Reward Payout vs World Population  (Read 5985 times)
nayrB16 (OP)
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August 11, 2012, 04:12:05 PM
 #1

In October 2011 World population was estimated to have surpassed the 7 billionth person. Since then world population has increased by a net growth of around 45million people (August 11 2012, about 10 months later)

The current Bitcoin block reward payout of 50 coins is scheduled to decrease to 25Btc at the 210,000 block around early to mid December. The Bitcoin network is designed to mine around 144 blocks or currently 7,200Btc a day which equals ~2,628,000Btc a year

At the current rates the world population is increasing 17x faster than the yearly payout of mined Bitcoins.

Already we have diminishing returns of mined bitcoins when measured against population growth. The way the system is designed with a hard limit of 21 million bitcoins theoretically means that eventually they will all be lost due to forgotten passwords, deleted wallets, crashed computers without backups....etc.

I propose we should change the bitcoin protocol to leave block mined rewards at 50Btc indefinitely that way there will always be a steady predetermined supply of coins, that will grow at a much slower rate than the global population

It's my opinion that this will cause slightly less hording of bitcoins knowing there is no longer a hard limit to reach on the bitcoin network causing exchange price spikes and also prevent theoretical eventual loss of all bitcoins.

Your thoughts?

Haha! I'm the only one to control Bitcoin address 1HjtErSHNEHtY347LouvsFq5KesHkEZLAV
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Bitcoin mining is now a specialized and very risky industry, just like gold mining. Amateur miners are unlikely to make much money, and may even lose money. Bitcoin is much more than just mining, though!
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cypherdoc
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August 11, 2012, 04:16:44 PM
 #2

No.  the very reason, IMO, that ppl invest in Bitcoin is b/c of the projected fixed supply.
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August 11, 2012, 04:21:55 PM
 #3

At the current rates the world population is increasing 17x faster than the yearly payout of mined Bitcoins.

Already we have diminishing returns of mined bitcoins when measured against population growth. The way the system is designed with a hard limit of 21 million bitcoins theoretically means that eventually they will all be lost due to forgotten passwords, deleted wallets, crashed computers without backups....etc.

Your thoughts?

Based on what evidence so far?
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August 11, 2012, 04:22:40 PM
 #4

No.  the very reason, IMO, that ppl invest in Bitcoin is b/c of the projected fixed supply.

+1

This is the reason people buy bitcoins, because of limited supply. Look what is happening to the US dollar, when they increase the money supply, they devalue the dollar.

Bitcoinica still has not given me 50% of my claim of 600 BTC
INTERSANGO can go down with bitcoinica for abandoning customers
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August 11, 2012, 04:25:40 PM
 #5

No, please no, not again this thread!

I voted NO.

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August 11, 2012, 04:28:10 PM
 #6

the antithetical presentation of the asymptotical distribution of Bitcoin to the exponenetial increase of M2 is so compelling when taken in the context of the world's financial problems today that most intelligent fair minded ppl conclude they want something different, not similar.
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August 11, 2012, 04:39:17 PM
 #7

This change has already been made, so the problem is already fixed. Just use DeVCoins or GRouPcoins instead of bitcoins, they already provide this feature.

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August 11, 2012, 04:39:29 PM
 #8

In October 2011 World population was estimated to have surpassed the 7 billionth person. Since then world population has increased by a net growth of around 45million people (August 11 2012, about 10 months later)

Just off the cuff, that does not sound right.  At that rate, it would take us 20 years to grow to 8 billion.  I'll see if I can find some facts to back myself up.

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August 11, 2012, 04:44:47 PM
 #9

This is not good idea. I respect your effort, but this is what I do not support.
Stephen Gornick
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August 11, 2012, 04:48:36 PM
Last edit: August 11, 2012, 05:29:28 PM by Stephen Gornick
 #10

Your thoughts?


Let's say that you got thousands of votes here, 100% in favor of this change.  And then let's say even the group of core developers somehow lost their sanity and agreed to make this change.  It would not make any difference.

Here's why.  Come December when block 210,000 arrives, there will be a blockchain fork between those using clients that follow the original protocol (which drops the reward to 25 BTC per block) and those that have clients that follow these new rules.  Any coins starting from block 210,000 and on that are still at the reward of 50 per block (i.e., follows the new rules) are worth less because they won't be accepted in many places (i.e., only at the places that use a client that follows the new rules).

I personally won't be using any client that includes this change and as a result my client will reject any blocks mined using the new rules.  It won't even relay them.

I expect my exchange will not want to end up being the bag holder for worthless coins after people have converted the "new rules" coins to fiat and then withdrawn the funds, so they too will only run clients that do not accept these new blocks from the fork.  The same thing happens with merchants -- your new rules are not welcome there either.

Blocks mined under the original rules will continue to be mined by one or more mining operators, and their new blocks (which will by then generate coins at the rate of 25 BTC per block) will continue to propagate via others following the original rules, will successfully verify, and will continue to be used by those trading.  The blockchain under the original rules will not even see a hiccup while the fork essentially gets ignored.

So to do what you seek you don't need just a majority from users on this forum to vote +1, nor do you need even just a majority of developers onboard to successfully push through such a change.

You would need an economic majority coming from those who accept bitcoins to sign on to the change.  You need exchanges, merchants, and individual investors and traders  -- anyone who accepts bitcoins in exchange for something of value, to want to adopt the new rules.   I cannot imagine gaining their endorsement for any rule change that devalues coins.

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SimonL
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August 11, 2012, 05:13:06 PM
 #11

OP, you have rehashed yet another idea that has been rehashed 2-3 times in the recent past on this forum alone, ALL of them have been shot down because they are, poorly thought out, based on FUD, and are completely uninformed about what real, sound money actually is in the real world.

You don't like Bitcoin? Fair enough, please go out there Satoshi-style, and create the next superior alternative revolutionary digital currency. Until then, shutup.
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August 11, 2012, 05:29:26 PM
 #12

At $2/BTC:
"OH NO, CUTTING MINING IN HALF WILL CAUSE EVERYONE TO STOP MINING!"

At $4/BTC:
"OH NO, CUTTING MINING IN HALF ISN'T WORTH IT!"

At $8/BTC:
"WE CAN'T AFFORD CUTTING OUR MINING PROFIT IN HALF!"

At $11.50/BTC:
"TOO MANY PEOPLE USING BITCOIN! MINING WILL STOP IF WE KEEP HALVING THE REWARD!"

First seastead company actually selling sea homes: Ocean Builders https://ocean.builders  Of course we accept bitcoin.
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August 11, 2012, 05:55:42 PM
Last edit: August 11, 2012, 06:09:40 PM by dancupid
 #13

Though the answer to this question seems obvious to a bitcoin holder, miners may have a different opinion - and it's their vote that counts.
There is a tension between people who hold bitcoins and want deflation, and miners who want to earn more bitcoins.
The allure of more bitcoins per block is a delusion, but if enough miners agreed, then there is the slight possibility of a fork that could develop momentum - especially if bitcoin was floundering somewhat.
I suspect miners faced with a fork like this would simply choose to drop out and wait for low difficulty rather than pursuing an inflationary model - or maybe they'd mine both and wait for the winner.
jackmaninov
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August 11, 2012, 06:10:18 PM
 #14

IMO changing the block reward to continuous linear expansion wouldn't greatly affect the economics of bitcoin in the (extreme) long term, but it also wouldn't satisfy anyone's desire to have an inflating money supply either, so I don't see why anyone would want to make the change.

Once you had trillions of bitcoin in circulation, the 2 million newly minted coins a year would presumably be noise on the scale of the overall money supply, and injecting this would have no tangible impact to the "new" population created that year. This is essentially the same case we run in to (much sooner) when we start sub-dividing satoshis and block rewards of these sub-satoshis continue to accrue ad-infinitium; block rewards continue to be released forever but they become meaningless scraps for the miners to fight over, hopefully while sustaining themselves on transaction fees.

Both schemes asymptotically approach zero monetary inflation in the long run: the linear minting model approaches zero with no final maximum amount of coins and the decay growth model approaches zero more rapidly and limits the final number of coins. Both models still force us to abandon central economic planning, price stability, etc, and so I guess the argument then becomes how quickly we want to give ourselves to get over the hump into the new economic world we see before us.

As an "early adopter" of bitcoin I'd argue that the current model of debt-based money is what forces our economy to destructively grow at ever increasing rates that cause extreme economic instability and are a threat to the carrying capacity of the earth, and that we should make this transition sooner rather than later to get away from these problems. In this way I agree with the current model of bitcoin minting: get them out there quickly and then turn the tap off quickly.

I would also think that bitcoin "newcomers" that may wish an extension of the easy money that early mining rewards gave so that "they can get theirs" may want to reconsider their wish. As long as bitcoin maintains value and mining requires investment, the early adopters will always be able to invest more in mining equipment and take the majority of the block reward. It's similar to the fact that, in principal, anyone can open a bank and get in on the fractional reserve fiat money-printing game and eventually grow large enough to get access to the newly created money flowing out of the central banks. In practice the barriers to entry to this game are too high and no one that tries to do this will get very far before being bought out by the existing players.
dancupid
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August 11, 2012, 06:10:40 PM
 #15

Though the answer to this question seems obvious to a bitcoin holder, miners may have a different opinion - and it's their vote that counts.
There is a tension between people who hold bitcoins and want deflation, and miners who want to earn more bitcoins.
The allure of more bitcoins per block is a delusion, but if enough miners agreed, then there is the slight possibility of a fork that could develop momentum - especially if bitcoin was floundering somewhat.
I suspect miners faced with a fork like this would simply choose to drop out and wait for low difficulty rather than pursuing an inflationary model - or maybe they'd mine both and wait for the winner.

Any miner that chooses a fork with perpetual inflation is cutting off his nose to spite his face and will soon realize this when no one purchases coins on their fork. Also, I'd guess many miners are also holders.

I agree - Inflation is appealing to the people who print the money (the miners), though bitcoin's decentralized nature means that the holders will stick with the miners who support the Satoshi model.
Vitalik Buterin
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August 11, 2012, 06:11:01 PM
 #16

Besides, a constantly increasing world population is NOT sustainable, so let's not base our systems on the idea that it is. Sound good?

Define "world". As a proponent of space exploration, I see things a bit differently.

Although making Bitcoin work over a one hour latency is a rather interesting task...

Argumentum ad lunam: the fallacy that because Bitcoin's price is rising really fast the currency must be a speculative bubble and/or Ponzi scheme.
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August 11, 2012, 06:13:29 PM
 #17

inb4 somebody posting a forked version of bitcoin to do just that when the block rewards reduction is up.

ENTERPRISE LEVEL TROLLING
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August 11, 2012, 06:14:42 PM
 #18

This is crazy, miners can already merged-mine both DeVCoins and GRouPcoins alongside BiTCoins, so they can mint two of these always same number of coins per block coins right alongside their bitcoins almost free; there is thus absolutely no point whatsoever screwing around with actual bitcoins in such a way.

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August 11, 2012, 06:15:51 PM
 #19

IMO changing the block reward to continuous linear expansion wouldn't greatly affect the economics of bitcoin in the (extreme) long term, but it also wouldn't satisfy anyone's desire to have an inflating money supply either, so I don't see why anyone would want to make the change.

Once you had trillions of bitcoin in circulation, the 2 million newly minted coins a year would presumably be noise on the scale of the overall money supply, and injecting this would have no tangible impact to the "new" population created that year. This is essentially the same case we run in to (much sooner) when we start sub-dividing satoshis and block rewards of these sub-satoshis continue to accrue ad-infinitium; block rewards continue to be released forever but they become meaningless scraps for the miners to fight over, hopefully while sustaining themselves on transaction fees.

Not really - you forget the impact of lost coins. Assuming a 0.5%/year loss rate, a permanent 10.5 million BTC per four years would amount to an ultimate fuzzy cap of 525 million coins, while Bitcoin's current strategy would peak the currency at 18.9 million in 2028 and then have it slowly come down and be all the way down to 13.6 million at the end of the century.

Argumentum ad lunam: the fallacy that because Bitcoin's price is rising really fast the currency must be a speculative bubble and/or Ponzi scheme.
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August 11, 2012, 06:16:35 PM
 #20

AThis is crazy, miners can already merged-mine both DeVCoins and GRouPcoins alongside BiTCoins, so they can mint two of these always same number of coins per block coins right alongside their bitcoins almost free; there is thus absolutely no point whatsoever screwing around with actual bitcoins in such a way.

-MarkM-


yes it's pointless.... but it would be sure awesome to witness the drama it would bring with it  Grin
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