Post
Topic
Board Bitcoin Discussion
Topic OP
Enforcing a production quota on block space that fights the free market
by
Peter R
on 15/09/2015, 18:22:10 UTC
Question: is it possible for Bitcoin to enforce a rule that goes against the will of the market?  How can we enforce rules that most of us disagree with?

As an example, consider the block size limit.  When it was put in place five years ago by Satoshi, it served as an anti-spam measure.  It was actually 800x larger than Q* so the vertical line marked Qmax was actually 100 ft off the chart!  Since the production quota was to the left of the free-market equilibrium point, it didn't affect the market dynamics.  There was no economic pressure to change the limit.  



However, Bitcoin has grown tremendously over the past five years and I believe the limit is now serving as a political measure instead.  It is to the right of Q*, resulting in what economists call a "deadweight loss."  This is the total economic activity lost as a direct result of the quota.  It also represents the will of the market (people) clamouring for change.



If the market wants to be at Q*, but the production quota is forcing it to be at Qmax, what can a group do to continue to enforce the production quota against the will of the market?  How can the invisible hand be restrained?