A while ago I've originally posted this in r/Bitcoin and got hate and even banned for a bit.
I'm also curious to know what this community thinks about these ideas.
Fungibility – 1 BTC should be worth 1BTC. But since the blockchain is public, if certain coins get labeled as "dirty" then they won't be accepted by certain merchants. Even if you send them to a bigger address with multiple coins, then all coins from that address could be labeled as "dirty" or just until only the "dirty" amount is left unspent. "The public can see that someone is sending an amount to someone else, but without information linking the transaction to anyone […] The risk is that if the owner of a key is revealed, linking could reveal other transactions that belonged to the same owner." Nakamoto, S. (2008).
Limited supply – Yes, in theory, that means the value of BTC will increase. But this is PoW not PoS. So the value comes from the miners that support the network. And a valuable BTC means nothing if it cannot reach the miner that secured the network. We now see a trend where BTC becomes a store of value. More, people are thinking about borrowing against it. That means, the BTC will be locked somewhere. Say, with time, everyone manage to buy the entire supply and won't use it as a P2P currency. What I understood Satoshi had envisioned, is that after the coinbase incentives ends in ~2140, the network will be sustained by the transaction fees "Once a predetermined number of coins have entered circulation, the incentive can transition entirely to transaction fees and be completely inflation free" Nakamoto, S. (2008). But if everyone holds it as a store of value and borrows against it, how will that happen? Will we just assume this "will simply not happen" and "there always be someone making a transfer" thus generating fees?
Any thoughts?
Two potential Bitcoin flaws that I'm concerned to have real potential to make this project not work. Can we find a solution?
byu/SilentW1 inbtc
Posted by SilentW1
2 Comments
Monero has addressed both of these issues, in addition to the issue of centralizing pow
The first problem ist by design as it isnt anonymous but pseudonymous. Dirty money can always be tracked, with the possibility that after enough activity and time most If not all wallets could2end up tainted and sanctioned by exchanges.
The second problem ist also fairly untouchable, miners currently pay their bills with mining rewards, newly created coins sold to pay the bills. When that incentive vanishes their only way to pay their bills ist via transfer fees which quickly will get unsustainable at the currrent levels. The less trading that happens because of this, the higher the fees will get in a self sustaining loop that eventually forces miners to reduce costs. Which makes the network either prohibitively expensive to use, or unsafer as hashrates drop very low to reflect the limited amount of incentive there is.
Core point is, while there might be some miners willing to work at a loss or for free to “support and strengthen the network”, most of both all at that point are in it for the money and will be gone the instant there is something more effective, morepayong off to do with their setup and resources.