1CtfHjRxn4UzNinEgUJgCCSV98yAZ6zVrZ (24100) ·
Hi @109, the unfortunate dynamic of BTC becoming more expensive to use the more people using it is correctly described in your post. But gold has a similar dynamic, albeit a bit different.
https://breakingsatoshi.com/2020/01/18/more-on-digital-gold/
Replies
1CtfHjRxn4UzNinEgUJgCCSV98yAZ6zVrZ (24100) ·
In gold's monetization process, the feedback loop described by Menger (while referencing to John Law who described it first), resulted in gold, on the margin, becoming less useful for small txs, why regular people later often dealt with silver or copper.
1CtfHjRxn4UzNinEgUJgCCSV98yAZ6zVrZ (24100) ·
In other words, this is not necessarily a fatal dynamic, but an expensive inconvenience that manifests itself in the scaling through other monies, or technical layers if possible (silver, LN, gold certificates etc).
1HsARx3TiY2iYHWoyu4XF88fZq9rih32gH (116) ·
There’s an order of magnitude difference in degree though and gold was still useable in a lot of daily commerce. See the many examples of gold coins of all weights! Bitcoin becomes unusable.
1HsARx3TiY2iYHWoyu4XF88fZq9rih32gH (116) ·
And there are other ways in which gold becomes more useful with an increase in demand—higher value per ounce means you can carry smaller and smaller weights of gold (less costly) at the same value. But Bitcoin just gets more costly to move.
1CtfHjRxn4UzNinEgUJgCCSV98yAZ6zVrZ (24100) ·
I agree that this dynamic on the whole is way worse for BTC than for gold, why all bets are made on LN now. If LN (more specifically the many implementations of it) does not work well, BTC faces larger blocks or demonetization. Needs to be most saleable!
1HsARx3TiY2iYHWoyu4XF88fZq9rih32gH (116) ·
Question: how do full nodes secure the network if nobody but a select few people can afford to actually transact on-chain? If you can’t use the chain, running a node doesn’t matter, no?
19gAUDU4VQoVuLgeL9pwTepPsZonqvALhv (678) ·
I've been looking at LN for a long time and following their "community" somewhat. I have the biggest LN shill updating me constantly.
It seems like an abject failure.
Also interesting dynamic with the BTC network effect. LN does not have it.
1CtfHjRxn4UzNinEgUJgCCSV98yAZ6zVrZ (24100) ·
Not sure about 'securing the network'. To me, running a full node is an act based on self interest (assessment of txs and rules). A full node gives me better ability to resist stupid decisions by for example miners or devs, like a tax akin to BCH or ZEC.
1CtfHjRxn4UzNinEgUJgCCSV98yAZ6zVrZ (24100) ·
Refusing to accept such change, I simply attempt to transact with the old economic rules until a self-interested miner builds a block. This defense works fine today when fees are "low". But what if they are 50 USD?
1CtfHjRxn4UzNinEgUJgCCSV98yAZ6zVrZ (24100) ·
On the margin, full nodes are crowded out. But depending on how good LN works, bear in mind the avg tx fees paid to open and close a channel ought to be divided by the number of txs made in the avg channel. Tx fee/tx may be low, in best case.
1HsARx3TiY2iYHWoyu4XF88fZq9rih32gH (116) ·
I think Saifedean’s and Tuur‘s predictions are accurate: fees in the thousands of dollars and specialized services managing on-chain transactions.
1CtfHjRxn4UzNinEgUJgCCSV98yAZ6zVrZ (24100) ·
For those crowded out on the margin, i see no point of a full node. But this may leave a large economic majority with the ability to resist changes to their money, and it is better than not having this. Do you see any fallacy in the above so far?
1HsARx3TiY2iYHWoyu4XF88fZq9rih32gH (116) ·
I just disagree it’s would be an economic majority. I think the situation you describe will be a relatively small number of economically active nodes and we are worse off than before.
1CtfHjRxn4UzNinEgUJgCCSV98yAZ6zVrZ (24100) ·
If fees are 1000s of USD, this implies it is likely the network is worth a lot. Must be a considerable number of rich individuals with an interest in not having their wealth screwed with. But yes, if affordable only for economic minority, then trouble.
1HsARx3TiY2iYHWoyu4XF88fZq9rih32gH (116) ·
As I understand it, the way to create the best incentives to run nodes is to enable a high volume of on-chain transactions. Even if running a node is more work and cost, there is a profit incentive for hundreds of thousands of businesses to do so.
1CtfHjRxn4UzNinEgUJgCCSV98yAZ6zVrZ (24100) ·
Do you have any input of the SPV/full node trade off in that case? Who picks SPV's and who assume extra costs of running full nodes?
1HsARx3TiY2iYHWoyu4XF88fZq9rih32gH (116) ·
Sure but I think that same logic would apply to big blocks. 100,000 businesses running nodes to accept on-chain transactions seems like a powerful check against bad behavior too.
1HsARx3TiY2iYHWoyu4XF88fZq9rih32gH (116) ·
How does it do that if transactions are too expensive for you to use the chain? A node isn’t useful if it’s not making economic decisions, no? Otherwise I could run 10k nodes on AWS.
1CtfHjRxn4UzNinEgUJgCCSV98yAZ6zVrZ (24100) ·
Good point! I need to think more about that scenario and whether it matters if a potential economic majority consists mainly of individuals or businesses.
1CtfHjRxn4UzNinEgUJgCCSV98yAZ6zVrZ (24100) ·
Ok, and have you seen any predictions detailing the number of off-chain txs, as opposed to on-chain ones? This is the uncertainty, and unless the # of off-chain txs can be very high (and reliable) in relation to on-chain #, there is of course trouble.
1HsARx3TiY2iYHWoyu4XF88fZq9rih32gH (116) ·
I don’t know if that’s easy to calculate, which is also part of the problem. Does all of this node price fixing not seem a bit central-planny to you? How could they know the “ideal” fee or ideal node cost? Why not let miners do that?
1HsARx3TiY2iYHWoyu4XF88fZq9rih32gH (116) ·
But you can sort of do some rough math on current transaction volume and fees that would be required to replace the block rewards and it’s not very encouraging even at this very small level of demand. Tuur seems to think on-chain will be specialized.
1CtfHjRxn4UzNinEgUJgCCSV98yAZ6zVrZ (24100) ·
I see a 1T USD Bitcoin as a success and an ok victory against future State looters. With today's reward, that's around 50 USD/ tx. Others are more optimistic, but then the quality of the scaling solutions have to off-set the much higher fees.
1CtfHjRxn4UzNinEgUJgCCSV98yAZ6zVrZ (24100) ·
I am not technical, but tried LN and it worked. With that said, it must work for orders of magnitude more users simultaneously. One thing I have noted is that at least three teams are building own implementations, yet none has openly declared failure.
17wiCRZuJ9GWumnjr1shRfLVzRHd5BzDiR (8015) ·
Physical coins are a bearer instrument. Gold certs are a counterparty bearer instrument. LN is neither, nor were smelting costs passed along to gold cert redeemers as in LN.
L2 is an even worse dynamic, and yes, it was fatal for the gold standard.
1Eyk15KEeYX9JwH8e98pqpX3kTUuY9d43C (622) ·
Might be worthwhile to explore the full capabilities of SPV, and what is the minimum data required to provide a proof of invalidity by anyone running a full node (miner, business, govt, whoever.)
This Twitter thread has a starting point:
https://twitter.com/MZietzke/status/1122544733706838016
1CtfHjRxn4UzNinEgUJgCCSV98yAZ6zVrZ (24100) ·
Regarding central planning, I really don't see it that way. The limit was arbitrarily put there, but with an almost 200B USD network, and assuming users value running their own node, it gets a bit central-planny to shift this limit as well.
1CtfHjRxn4UzNinEgUJgCCSV98yAZ6zVrZ (24100) ·
There is also the partial fungibility of SHA256 mining capital, why the 'skin in the game' argument for behaving miners might not be as strong as many here think. The capital is not destroyed if by seeking short term gain, miners mess up the specific money
1CtfHjRxn4UzNinEgUJgCCSV98yAZ6zVrZ (24100) ·
And if a money has monetized and eaten most others in that regard, great harm can be done to it without the black hole imploding. Gold and silver good examples; only few instances of enormous debasement fuckery leading to reversion to primitive monies.
1CtfHjRxn4UzNinEgUJgCCSV98yAZ6zVrZ (24100) ·
So I guess it still comes back to, how well can economically active nodes resist others attempting to manipulate the money. The share of such nodes is likely to be higher on BTC than BSV despite the fee pressure imo, but we will see about that.
1PKvGfnbofHU7srBqnBnea1tiZBGuYgoiD (12203) ·
Ask any gold mining company are they mining gold because they think that the gold price is going to double. No real gold mining company has built their business around depending on the gold price going up...
https://twetch.app/t/c9abec172b4740c3ff892cdc977e5579fb93a1dbe136b75413f984e56bfde07a
1Eyk15KEeYX9JwH8e98pqpX3kTUuY9d43C (622) ·
Might be worthwhile to explore the full capabilities of SPV, and what is the minimum data required to provide a proof of invalidity by anyone running a full node (miner, business, govt, whoever.)
This Twitter thread has a starting point:
https://twitter.com/MZietzke/status/1122544733706838016