Re:Bitcoin is not a store of value
by betwixthewires on Tuesday September 20, 2022 @04:37PM
(#32917464)
There won't be as much bitcoin to sell, but the capital outflow remains the same if the security remains the same, and that means the price of each bitcoin would have to be much, much higher, but that requires equal capital inflow. If inflow is less, price goes down, miners can't afford it so they drop off the network, security goes down and capital outflow goes down too.
Block difficulty does not determine security in any way. All it determines is average block time, that's it. The security of a network is determined solely by the hash power on the network (and the expense to double it). There's no window while difficulty adjusts, if hash power goes down the security goes down until hash power goes up again. The network was less secure if the hash rate was lower. On September 14 at 12:00 UTC, bitcoin's hash rate was 136 EH/s. Right now it is just under 250 EH/s. Bitcoin is more secure right now than it was on September 14 at 12:00 UTC, and the block difficulty has nothing to do with that whatsoever.
You're right. Sell pressure (capital outflow) cannot end. That said, with inflation (or emission) becoming less and less over time, there won't be as much to sell.
I'm sorry, but difficulty is also security. Attacks aren't just about hashpower, it is also expense (capital to buy and run enough hash) for the attack. If the hashpower goes down, you're right... there is a window where attacks become possible before the difficulty adjusts (I'd argue ETH PoW per block adjustments were more secure), but that would require the same amount of lost hashpower to also be 'found' and dedicated towards attacking the network at the same time. It isn't like the network was less secure 1 month ago than it is today.