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If something halves every 4 years how much does new supply shrink per day if it is progressively smaller? (lemm.ee)

submitted 1 day ago by [email protected] to c/[email protected]

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I have an interest in bitcoin and am trying to understand the supply shrinkage effect on price, Im trying to figure out if somethings new supply halves every 4 years how much does new supply shrink per day, if it is getting progressively smaller?

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[–] [email protected] 1 points 10 hours ago (1 children)

Mining coins suddenly becomes really fast and far more energy efficient. All 21M BTC would be mined before we hit all 5 halvings.

This doesn't happen, because Bitcoin has difficulty adjustments. When computing power rises enough, the difficulty adjusts up to maintain an average block time of 10 minutes. If quantum computing scaled it up so drastically, then the difficulty would rise just as drastically until it was back to an average of 10 minutes.

I don’t thing the blockchain cryptography is quantum resistant, is it?

Not really, no, but that's more of an issue with the public-private key systems we use to verify ownership of wallets than it is about mining, per se. It would make sense for there to be a hard fork to a quantum-resistant algorithm to make sure the actual state of blocks remain small, but that's a different issue. The primary change would need to be a switch to quantum-resistant cryptography for public-private key pairs to ensure nobody can steal anyone else's assets using a quantum computer.

Theoretically, at some point the reward becomes so small, so fractional, that mining itself isn’t cost effective.

Remember fees. People pay to have their transactions included. The goal for Bitcoin is to have these fees pay the miners instead of the block reward, which is effectively just a temporary subsidy.

As of now, fees don't usually make up more than a few percentage points of the block reward, so it's looking unlikely that they will ever actually maintain the same, or higher rate than the current subsidy.

If you wanted a blockchain that was closer to being sustainable in terms of fee revenue funding monetary policy, you'd want Ethereum with its burn mechanics.

[–] [email protected] 1 points 1 hour ago

This doesn't happen, because Bitcoin has difficulty adjustments. When computing power rises enough, the difficulty adjusts up to maintain an average block time of 10 minutes. If quantum computing scaled it up so drastically, then the difficulty would rise just as drastically until it was back to an average of 10 minutes.

Does this make allowances for quantum computing? Because IIRC it's still based on prime factoring, and if the prime factoring problem is broken, there are few options for scaling difficulty.

For example (hypothetically, because I haven't looked into the code), you can scale factoring by increasing the order of magnitude of the primes. If a device Congress along that can factor primes of arbitrary size, your scaling function won't do anything except put everyone who doesn't have a quantum computer out of the business of mining.

If you wanted a blockchain that was closer to being sustainable in terms of fee revenue funding monetary policy, you'd want Ethereum with its burn mechanics.

Ok, so no offense, but let's make the distinction between cryptocoins and blockchains, and that we're talking about coins. Blockchains - whether public ledger or not - are a component of cryptocoins, but exist outside of cryptocoins. The two terms are very much not synonymous in important ways, and whenever they're used synonymously, even casually by people who understand the difference and are just speaking in shortcuts, it just muddies the water for people whose grasp on the fundamentals are already weak.

I don't want any cryptocoin that's based on proof-of-work; that's just a waste of energy, and it's a large reason why environmentalists get riled up and cryptocurrency - even when the philosophy of cryptocurrencies align with their values and the haven't realized it. And it's a valid point: we are not yet near post-scarcity energy-wise, and using it for something as abstract as cryptocurrency, when a large number of them are little more than scams, is absurd. Especially when there are other, better basis for cryptocurrency that don't burn tons of coal for a few dollars of conceptual value.