BitcoinWarrior Comment: The following article discusses Vitalik Buterin calling the supply cap of 21 million Bitcoins ‘dishonest.’ Though we don’t usually comment on reposted content, we couldn’t let this one go without remark.
In the cryptospace, there is a lot of acrimony and infighting, and the worst offenders are usually those sniping at other projects due to the failure of their own project to gain traction.
Now, Ether can hardly said to be unsuccessful as it has significant market cap and development. It can hardly be said to be problem free either. Many see Ether and Bitcoin as not direct competitors, but fulling complimentary niches. Buterin’s use of the word ‘dishonest’ thus surprised me. This is a charged word that seeks to create an emotional reaction, not a reasoned understanding.
Satoshi was certainly not ‘dishonest’ in creating a decreasing reward system. The idea that rewards would be eventually replaced by transaction fees as incentive to secure the network is logical. How that works out in practice is another question, but there is nothing dishonest about it.
For sure, in retrospect, other ways of thinking about the block reward could have been tried. For example, there could have been an rising then descending reward schedule to promote a more even distribution of coins and not quite so favor early adopters. Or, a small continuing reward along the lines of what Peter Todd has suggested to keep the miner incentive in place and to replace lost coins.
At this stage, the block reward protocol is unlikely to change, despite some recent discussions about it. Bitcoin will find it’s equilibrium, and we are not particularly concerned about miners staying incentivized to secure the network. How the protocol works is very clear, and there is nothing dishonest about it, except for people using language like that to snipe at other projects.
The issue around Bitcoin’s supply cap of 21 million BTCs is one that has been around for quite some time now. The debate was pushed into the limelight as recently as February, when heated discussions about the subject made their way to Twitter. Vitalik Buterin, the Co-founder of Ethereum, became the latest person to give his two cents on the digital gold’s supply cap.
During a recent Reddit Q&A, the Russian-Canadian programmer was asked how he felt about Bitcoin’s supply cap, in light of the falling block rewards that would follow the cryptocurrency’s halving in 2020, newsBTC reported.
Buterin did not mince his words, stating that “there was something dishonest to this decreasing rewards schedule concept.” Citing Bitcoin’s 21 million supply cap, Buterin said that imposing such an upper limit was disingenuous as it presented two diametrically and contradictory ideas at once.
“You’re using the present level of issuance of the system and the system’s ability to operate under the present level of issuance as a proof that the system is safe. But then you’re using the fact that it has this baked in decreasing reward schedule as a proof that it’s finite supply. But then if its finite supply, then the reward schedule is going to decrease and we have no evidence that the system is going to be safe under the decreased awards. “
Buterin’s comments questioning the safety and security of a chain with reducing emission rates incited a lot of diverse reactions online. Founder of Mythos Capital, Ryan Sean Adams, was one of the people to come out in support of Buterin. He said,
“Completely agree. Supply caps are good for the meme, but ultimately disingenuous when implemented too early.”
Others, however, were not that kind. John Carvalho, the CCO of Bitrefill, called Buterin’s example illustration of Bitcoins dishonest. He further added,
“..he ignores that the fees miners need are measured in their own capex, not in bitcoins. If price doubles at a halving, everything is fine.”
The reaction to Vitalik Buterin’s comments on Bitcoin’s supply cap is a continuation of the debate that ensued after February’s Satoshi Roundtable. Matt Luongo, the Founder of Fold, had then proposed the raising of Bitcoin’s supply cap. Luongo said that doing so was only logical as with block rewards halving, miners won’t have any incentive to secure the network and protect it against a 51% attack.
Like Buterin, Luongo’s arguments incited a heated discussion as well. Bitcoin Cobra, the Co-founder of Bitcoin.org, responded,
“Anyone who dares suggest we raise the supply of Bitcoin should be ostracised and chased out of the community. 21 million Bitcoins will be minted, no more.”
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