The question of how miners will be paid in the long run, after mining subsidy rewards disappear is a much debated topic in Bitcoin. For those who don’t know, mining rewards are set to half every year until they finally reach zero sometime in the year 2140. How the Bitcoin mining ecosystem will remain profitable (and thus healthy) is up in the air. Miners are important as they provide security to the Bitcoin network because they convert real world energy into network security to guard against attacks from malicious forces. Therefore, the more decentralized and diverse a mining ecosystem is, the better for Bitcoin.
So what will happen when mining rewards disappear? Well, some miners feel that transaction fees should rise up to fill up the shortfall. As Ang Li puts it from an excerpt of the a recent article at Bitcoin.com
The incentives that Satoshi Nakamoto designed in the Bitcoin whitepaper are not enough to sustain mining for long, Li feels, adding that as the block reward halves every four years, miners income will continue to decline. According to him, keeping the block size where it is now will not provide enough incentive and therefore has to be reconsidered. Li also believes that only a larger mining transaction fee will maintain the balance. “By increasing block size, and transaction numbers, the fees will gradually replace the block reward, providing enough incentive for the miners to defend the bitcoin hashrate. This is the fundamental way to achieve healthy development of the whole ecosystem.”
Easter weekend. Family reunions, liturgical services, fasting for some, feasting for others, a time for renewal, time to dispel some crypto myths!
Everyone talks about “going to the moon” in crypto but few if any really knows what that means. Cypherpunks care about privacy and censorship resistance, libertarians care about political ideology and businesses care about making money. But how many of them actually think through how to get there?
I don’t mean in a metaphoric sense, I mean pragmatically. What is the adoption roadmap? What do we mean by ‘moon’? Price? Resistance to government usurpation? Censorship resistance? Self sustaining system without any oversight?
True, most people who say “To the moon!” are just pumpers or speculators trying to incite a windfall profit from the penny stock altcoin that they purchased for the express purpose of dumping it for a profit on unsuspecting suckers. But let’s consider a moment the goal of Bitcoin –becoming a widely accepted alternate money to fiat currencies– how does Bitcoin get to there from where it is today? What challenges and obstacles must it overcome? What different stages of development and growth must it evolve through?
As the ongoing debate in Bitcoin between the Core and the Classic camp rages on, early signs of tentative order emerging spontaneously from the un-orchestrated chaos can be seen. For one, most of the intelligent proponents on either side finally seem to have recognized the fundamental irreconcilable differences of opinion on either side of the divide, having spent the last 3 months weeding through the army of trolls and sycophants which always seem to amass around idealogical movements.
The industry has started to look upon itself in a satirical way, from high profile jokers like Samson Mow, to the absurd display at the Miami Satoshi RoundTable, organized by Bitcoin Foundation Bruce Fenton, which sported such medieval artifacts as an actual suit of armour and a Bitcoin Magna Carta which would make 45 year old AD&D live roleplaying nerds giddy. The industry has certainly reached its apogee of insanity, absurdity and self flagellation, and it can’t possibly get any worse, and thus, we should expect to see things starting to come back to reality very soon.
Several promising things have been happening recently that give me cause to be hopeful that we may yet see the end of this “Rite of Passage” in the life of Bitcoin:
Core has started to consider a hard fork proposal themselves.
Interest in Bitcoin has been re-kindled in the form of 2000+ (as of writing) new nodes added to the network.
Mining pools have started to implement miner voting systems within their constituents.
New consensus tools have emerged which help bring visibility to and encourage people get involved in, the decentralized crypto-governance process.
A total of 4 past attempts at securing industry participants into binding agreements have all failed to produce consensus.
I have often observed that disagreements between smart people inevitably devolve into a difference of opinions based on assumptions which are either ignored by one or both sides or insufficiently proven, which leads to the construction of a belief system built on top of nothing more than reasonable guesses. Because of this, it takes a long time before one can peel away the layers of conditional truths before you reach the core assumptions over which the principle disagreement is erected upon. (one needs to look no further than the renewed flat earth movement to see how you can rewrite your entire belief system to support your theory). Over the last month as I have debated with the decentralists on the foundations of their “decentralization is the most important thing about Bitcoin”* argument, I believe I have finally discovered the crux of the dispute, the mistaken assumption, upon which all other conclusions are derived upon, the genesis block of the debate, if you will.
The problem comes from the fact that the term decentralization has been overloaded to mean so many different things. From topological point of view the old graphic from Paul Baran (1964) (inset right) may seem to provide a good enough definition but only from the perspective of a network topology which is certainly not the common usage of the term today. More recently some folks have improved upon the definition to more clearly indicate that it is the notion of control (the little puppet master hands in the diagram) of the network nodes that make them more or less decentralized.
The disagreements between the ‘big blockers’ and the ‘small blockers’ in Bitcoin are heating up. Bitcoin Classic is poised to release its first client to compete with Bitcoin Core, and Bitcoin Unlimited has had its first vote on its new feature set. It is a time of peril in the galaxy…
Now as the credits fade into the star field background picture a big wedge shaped Star Destroyer with the banner reading “Decentralization” filling the screen. This word is really the Battle Cry of most crypto-currencies, and as I have written in the past, it is so poorly understood.
Everyone wants it, but few know what it is
It is a repurposed term, that simply describes a quality of network topology, transformed into a rallying call of rebellion. The problem is that almost everyone that I read or encounter in the industry uses this term as a panacea for all the problems that they see in the world today, without actually knowing what it truly means. They believe it because of faith from authority, and through basic reasoning, that it is good and thus must be fought for without actually knowing why. This is dangerous, as this is how cults start. The Cult of Decentralization.
I ask you, dear reader, please forgive me. I am going to break from my normal “impartial observer” commentary on the Bitcoin space and speak personally about a project that I am involved in, because I believe it matters.
There is an election going on in Bitcoin space. At least this is what the media is going to call it very shortly (perhaps in a months time, after it is all settled, as mainstream media is apt to do… always late to the party). This election, like any, is political. It is a battle of wills, of differing philosophies, of ways of thinking. But like all elections, I believe that the will of the people, the majority, will determine the results.
Bitcoin Classic, is an implementation headed by Gavin Andreson, Jeff Garzik, Jonathan Toomim and others, which aims to deliver an alternative implementation of Bitcoin, aimed at addressing the demands of the users and businesses in Bitcoin.