Bitcoin mining revenue will become entirely provided by transaction fees as block rewards rapidly fade away.
There isn't infinite demand for Bitcoin block space. Higher transaction fees push people to 2nd layers (Lightning), side chains (Liquid) or custodial exchanges, etc.
Conversation
BTC price went up far faster than block rewards went down, creating a massive amount of revenue for miners in the short term.
The price would have to double every 4 years simply to keep providing the same block reward revenue. Price would need to go up faster for it to increase.
1
1
3
The economics of this don't support the kind of paperclip maximizer that it's portrayed to be at all. I think it's likely that the mining revenue stays about the same going forward i.e. price doubles about every ~4 years and people avoid paying orders of magnitudes more in fees.
2
2
Replying to
I think you will get proven wrong in a massive way. #Bitcoin will either die or raise by far more than 2x per 4 years even in inflation adjusted terms.
1
This Tweet is unavailable. Learn more
If it's going up 50%+ in value yearly with a whole lot of volatile ups and downs then that seriously hinders using it as a currency. Also, I think for it to actually be worth increasingly more, it needs to succeed at being a base layer for a decentralized financial system.
1
I think it has a lot of potential to be a base layer for a decentralized payments system. I don't think it will be very compelling if it only ends up being usable as a way to make very expensive transactions for long-term storage and as a settlement layer for banks, etc.
1
Replying to
Lightning Network is here and works.
El Salvador will put it to the test but I have full confidence it will be a great success. Most people will not do transactions on L1 and we will find ways to further scale lightning beyond the need for many open/close transactions per user.
1
1
Replying to
I can believe that, and I think a lot of effort will go into successfully minimizing the necessary on-chain transactions by doing things in batches and avoiding it for most people. Hopefully it happens without losing a lot of decentralization, etc.
1
1
Unless block sizes get substantially larger (making the network far more centralized), I'm quite skeptical that fees are actually going to fill in as a substitute for block rewards. It's just off by some orders of magnitude...
Can do stuff in batches, but you only save so much.
Replying to
Custodial wallets are not necessarily the KYC monsters like Coinbase. They might be your uncle Jim who lets you and another 50 people use his channels.
In the long run I'm confident we get to models where such custodial wallets are trust-minimizing.
2
1
Replying to
I think most people would use enormous providers, largely based on seeing it as safer because it's widely used.
Look at Matrix, which is openly federated, but nearly everyone uses one server. Here's the breakdown in #grapheneos:grapheneos.org:
view.matrix.org/room/!SayHlEYX
2
Show replies