Quote from: DeathAndTaxes on May 16, 2012, 07:19:07 PM

Once again money is an abstraction.

The goal of any venture is to maximize wealth not money.

Yes. Agreed. Fine. That's not the point where we lost our communication.

Our discussion starts where your posting ends. If you want to provide some kind of mathematical model for maximizing wealth - you need a unit to measure wealth in. There is none - or, rather, it is arbitrary or dependent on the miner.

You could chose a gold standard, a dollar standard, a whopper standard, whatever. It will always be relative and different from person to person. And this is EXACTLY the problem I see here.

So, let us pick some mathematical model for the behavior of a miner (whoppers or Zimbabwe dollars - your choice). The wealth function (and thus the function the miner wants to maximize) will not only depend on todays conversion rate into your chosen wealth standard but also on his belief how this conversion rate will change during the near future. Again, the concept of "near future" is different from miner to miner.

Coming back to the original example: Some miners will be conservative and considerate of inflation - they will not switch to a 51 BTC per block chain. Others are more greedy - they will not switch to a 80 BTC per block chain but might consider switching to a 55 BTC block chain, giving it a try. So what we are likely to see is an interesting form of random mixture (and the same, as another poster pointed out, will be the case for the non-mining participants in the system).

The question I am interested is no one of structural stability. IF all miners are strictly conservative and refuse to change...the system will be stable. IF all miners are stupid and ignore inflation...the system will drift to chains with higher and higher block bounties. Some where in between these two extremes we will find the "real" Bitcoin network. What can we say about this real Bitcoin network? Right now we are (as we can observe daily) in a stable domain. How far away are we from an unstable area? Or, is the beginning of the instability domain ridiculously far away? I do not know. I probably will set up a simulation on this if a have a bit more time during summer. the ongoing discussion stimulates my curiosity.