I think Bitcoin’s network security is unstable in the long run due to the over-reliance on money printing to subsidize it. The existing validators have strong incentives to resist moving away from proof of work due to sunk costs in ASICs. There also just seems to be a lot of misunderstanding about the lack of advantages of proof of work compared to proof of stake or other consensus mechanisms.
So unless the incentive to attack the Bitcoin network exponentially decrease over time, the fundamental protocol must be changed at some point. And maybe Bitcoin survives that anyways. I don’t really know.
As for L2 scaling, last time I checked the lightning network had something like 650 transactions completed in its entire history. I really have no idea why that number is so low, but to me it indicates the product just isn’t very good. Can it be improved?
Maybe. But with Bitcoin’s transaction rate it would take like 1.5 years for everyone in the US to do one single transaction transferring money from Bitcoin to the lightning network. I just don’t see how that scales unless you basically NEVER write to the Bitcoin blockchain.
I mean maybe that can work? It’s not like people own shares of stock at the depository trust. Intermediaries work well elsewhere in the economy. But why would I want to use the lightning network? Literally the only potential upside I can think of is exposure to Bitcoin prices.
My overall impression is just that there are a dozen obvious things you could do if you wanted Bitcoin to be used as money and basically none of them are being done, so Bitcoin stakeholders must not care that much about facilitating exchange via Bitcoin. And I don’t see any reason why that will change.
I agree that the block subsidy is a large economic driver of mining right now. I don’t understand why Bitcoiners seem so convinced there will be a smooth transition from block subsidy to voluntary fee as the halvings continue. Is there literally any evidence that the fee market will work? Isn’t it pure conjecture? I’d really like an answer on that one.
As for L2 scaling, yeah I don’t believe LN in it’s current form is all that usable. Lots of smart people believe its getting there, though, so without doing object level analysis for myself I tend to think L2 will ultimately succeed. Again, though, I haven’t seen a high quality back and forth about this between two smart, well informed, people, which is definitely concerning.
The one major disagreement we have is that “proof-of-work has no advantages over proof-of-stake.” These two consensus mechanisms are entirely different. Proof-of-work requires staking a resource that is external to the network. This is critical, as it means that, were the network to fork, you can only stake your energy on one of the two new chains. In contrast, under proof-of-stake, your stake is duplicated in a fork.
This is critical, as it means that, were the network to fork, you can only stake your energy on one of the two new chains. In contrast, under proof-of-stake, your stake is duplicated in a fork.
I honestly never really thought about this before but I suppose it’s worth considering. Maybe it’s easier for a community to split after some controversial decision with proof of stake?
Proof of work is not really immune to it though. When the DAO hack happened on Ethereum, the chain split into Ethereum and Ethereum Classic even though the network used proof of work at the time.
Validators will continue to stake on any chain so long as it’s profitable. I don’t really see how proof of stake vs work changes that.
Sorry, I didn’t really explain myself clearly.
I think Bitcoin’s network security is unstable in the long run due to the over-reliance on money printing to subsidize it. The existing validators have strong incentives to resist moving away from proof of work due to sunk costs in ASICs. There also just seems to be a lot of misunderstanding about the lack of advantages of proof of work compared to proof of stake or other consensus mechanisms.
So unless the incentive to attack the Bitcoin network exponentially decrease over time, the fundamental protocol must be changed at some point. And maybe Bitcoin survives that anyways. I don’t really know.
As for L2 scaling, last time I checked the lightning network had something like 650 transactions completed in its entire history. I really have no idea why that number is so low, but to me it indicates the product just isn’t very good. Can it be improved?
Maybe. But with Bitcoin’s transaction rate it would take like 1.5 years for everyone in the US to do one single transaction transferring money from Bitcoin to the lightning network. I just don’t see how that scales unless you basically NEVER write to the Bitcoin blockchain.
I mean maybe that can work? It’s not like people own shares of stock at the depository trust. Intermediaries work well elsewhere in the economy. But why would I want to use the lightning network? Literally the only potential upside I can think of is exposure to Bitcoin prices.
My overall impression is just that there are a dozen obvious things you could do if you wanted Bitcoin to be used as money and basically none of them are being done, so Bitcoin stakeholders must not care that much about facilitating exchange via Bitcoin. And I don’t see any reason why that will change.
I agree that the block subsidy is a large economic driver of mining right now. I don’t understand why Bitcoiners seem so convinced there will be a smooth transition from block subsidy to voluntary fee as the halvings continue. Is there literally any evidence that the fee market will work? Isn’t it pure conjecture? I’d really like an answer on that one.
As for L2 scaling, yeah I don’t believe LN in it’s current form is all that usable. Lots of smart people believe its getting there, though, so without doing object level analysis for myself I tend to think L2 will ultimately succeed. Again, though, I haven’t seen a high quality back and forth about this between two smart, well informed, people, which is definitely concerning.
The one major disagreement we have is that “proof-of-work has no advantages over proof-of-stake.” These two consensus mechanisms are entirely different. Proof-of-work requires staking a resource that is external to the network. This is critical, as it means that, were the network to fork, you can only stake your energy on one of the two new chains. In contrast, under proof-of-stake, your stake is duplicated in a fork.
I honestly never really thought about this before but I suppose it’s worth considering. Maybe it’s easier for a community to split after some controversial decision with proof of stake?
Proof of work is not really immune to it though. When the DAO hack happened on Ethereum, the chain split into Ethereum and Ethereum Classic even though the network used proof of work at the time.
Validators will continue to stake on any chain so long as it’s profitable. I don’t really see how proof of stake vs work changes that.