Nick Szabo  🔑

.@Truthcoin drops a stunner on Bitcoin's long term security budget. Outstanding as usual http://www.truthcoin.info/blog/security-budget/ …

Lots of dubious assumptions: * Tx fees have historically risen and fallen with price, but they assume they are disconnected * L1 is a payment rail (nope, it's a settlement layer, and no altcoins are generally not as reliable and secure a substitute)

More bad assumptions: * Centralized services make it easy to switch to altcoins (no, mental tx costs + trust risks) * They seem to be implicitly making the dumbest assumption of all in these debates, that lower hashrate in the long run is less secure. Wrong.

I've seen only one possibly good argument for reduced security under a tx-fee-only regime, and that's the volatility of fees, which seem to behave nonlinearly as blocks become full. Might lead to corresponding big swings in hashrate. But they don't even mention that.

I would think by then Exchanges might become miners as well.

It's prudent for businesses & users to take part in mining defensively to participate in security. Even post subsidy, I am not so worried because even less secure money has worked because people need it to, and there is market incentive to find ways to fund #Bitcoin security.

This smacks of asking for volunteers to mine despite having unprofitable rigs. How to make it incentive compatible?

If your businesses doing millions of dollars a day you have plenty of incentive to fire up rigs.