Post
Topic
Board Speculation
Re: Bit coin is on a down hill slope
by
kokojie
on 18/12/2014, 03:30:37 UTC
...
There is no tax, just a distribution of coins. If 10% of new coins being emitted per year, then rougly the same amount of money will be spent mining them. The same goes for 5%, 2% of the market cap and so on. Money in, money out - no tax!

Call it "service fee" or "inflation," call it whatever you want, but ~10% of Bitcoin's market cap will be spent every year to maintain current level of security.  For now inflation is footing the bill, but once block reward halves, either security will suffer, or tx fees go way up.  

If Bitcoin stays relevant in the future there will always be a competition for "conquering" its algorithm. I can't say whether it will cost 10% of its market cap or not. But I can say for sure that those engaging in this voluntary competition will be getting something out of it - be it profit in the form of transaction fees or some other agendas. The algorithm really doesn't care about people's nationality, political or religious views, their skin or eye color. It simply says "here I am out in the open, make me run faster and you win!".

We have already gone through one halving and the network survived without suffering any security loss. For users the inflation is predictable and declining over time, miners get what they are after as their engagement is voluntary.  So there is really no cost or "tax" associated with running the network because you get what you pay for.

If there is a better way to organize a neutral global money system, we should have it penned here and get a nobel prize in economics.

FYI there is a better way, it's called Proof of Stake mining, it's working for a variety of altcoins, they have all avoided the inevitable downfall of PoW systems (expensive + low security).