Re:Many Bitcoin Miners Are at Risk of Turning Unprofitable
by sp332 on Wednesday April 18, 2018 @05:29PM
(#16871370)
Yeah, I think a decreasing block reward was a good idea, but I think it's on the wrong schedule. Following something like Metcalfe's Law, the value increases geometrically but the reward isn't decaying fast enough yet. That means at some point in the "middle", the value of the block reward will be increasing much faster than the amount of the reward is decreasing.
https://www.wolframalpha.com/input/?i=n%5E2+%2F+(2%5En)+from...
That's where we are now, and it means the reward will be large enough to drive bad behavior at least until the next halving (probably two years from now http://www.bitcoinblockhalf.com/ ).
Re:Many Bitcoin Miners Are at Risk of Turning Unprofitable
by paulmd on Wednesday April 18, 2018 @05:41PM
(#16871476)
The whole idea of discrete halvings of the block rewards at specific block heights also grinds me in general... why is this not a continuous function? Oh yeah, because that's how some guy set it up in 2012 before he disappeared.
People tend to think of the rewards as set in stone, but they're completely arbitrary (they just have to be agreed-upon by participants). For example, there's no need for them to taper off over time, we could keep them constant.
It's just a question of what you can get consensus for. The geometrically-decreasing rewards of Bitcoin are probably not optimal, but without centralized control there has to be some kind of pre-determined issue rate.
We could just as easily agree to halve them right now (which would probably reduce electricity utilization as well as network security, as miners go offline). And that's essentially what Ethereum is planning to do - a major decrease in block rewards in the near future, so that they can create deflation (dumb as hell, but that's what happens when you let a 17-year-old run an economy, he has big holdings of Eth and just wants to see the number go up).