> I like Bitcoin as a diversification for being a “better version of gold” - it has the scarcity ...
Why do we repeat the claim of Bitcoin scarcity when we all know it's just a promise and nothing more, there is no technical limitation?
All it takes to "print" more Bitcoins is for the majority of miners to agree to make a fork that will allow for more. And that will happen at one point.
As for Gold, good luck trying to mine an infinite amount of it.
Nothing stops you from changing the 21M cap in the code, but you need majority of the network nodes to agree to the new rules (aka a hard fork), the miners can't willy nilly change the rules of the network.
What you would have at that point isn't Bitcoin, it would be probably be called "Bitcoin infinite" or something, similar to "Bitcoin cash".
You don't need the nodes to agree on anything. If they don't agree, they drop off the network, and form their own chain with little to no hashing power, that will stagnate and die in short order.
We have precedence on what happens if nodes/miners try to attempt a hard fork, it's called "Bitcoin cash". You need majority to agree on the rules, nodes/miners/users/exchanges all need to agree on what's Bitcoin, that's the whole point of a decentralized currency.
If a block size change caused the split into Bitcoin cash, you can only imagine what a cap change on Bitcoin available will cause, 21M cap is a lot less controversial than block sizes.
> You don't need the nodes to agree on anything. If they don't agree, they drop off the network
The miners by comparison, drop off the old BTC network making difficulty go down and others can now mine BTC.
Certainly miners can make this decision. What they can't do is force the market to value the new fork as worth anything, while they are burning energy to mine it and wasting opportunity cost of abandoning finite BTC.
No, that was the original claim. That you need the miners to agree. They are the ones that hold the computing power.
The claim I responded to says that in addition to this, you also need the majority of the "nodes", which are just computers that do no work and just forward transactions. This is incorrect, you do not need their help. It is easier if you have it, but you do not need it.
The nodes are what actually enforce the rules. If you send out a transaction with 25M coins in, nodes won't broadcast that transaction and it doesn't make it to the blockchain.
Bitcoin mining power is concentrated in China with about eight times the hash rate of number two United States, which in turn has a similar hash rate to Russia and Kazakhstan. Rounding out the top six, composing more than 90% of the total world hash rate, is Malaysia and Iran. Do you think these countries share the ideological goals of Satoshi Nakamoto's dream?
I have no doubt that a persistent 51% attack by a cartel of miners would make Bitcoin liquidity an indefinite hard zero for selected "owners" of BTC.
Also, many of the miners in other countries are also Chinese.
I don't think the Chinese miners follow any particular ideology here other than to extract as much money out of the bitcoin market as they can, though.
The market wouldn't value that new fork on par with finite BTC, so those miners would be hurting themselves, and burning energy for a worth-less coin.
This action is trivial to consider, so what makes you think it has bearing on BTC value? When these miners leave old network, hash power & difficulty go down so other miners who prefer finite protocol can come in to mine. What's the actual threat then?
All these replies telling you this isn't possible are amazing. Perhaps they are forgetting that when you hold coins at Coinbase that's no different from a bank giving you a bank note saying you "own" x amount of gold in their vault.
EDIT: I was obviously not the first to say this but it is really interesting to watch the crypo space re-invent all of modern finance, one piece at a time.
Except a bank run on this sort of endeavor would bankrupt Coinbase in a few hours. The "threat" of taking delivery of actual BTC will strongly push against entities that want to fractionally reserve BTC.
"not your keys not your Bitcoin" has been a mantra from the beginning. You can track BTC withdrawals from exchanges. Ability to possess your own BTC quickly and easily is a primary feature of Bitcoin that separates it from gold and fractionally reserved fiat.
Fractionally reserved Gold happens because gold is heavy, hard to transport, store, and secure. This leads to centralized storage and then fractional reserve. You do see how the lack of physical properties, especially in contrast to gold, make the comparison much different in regards to willingness and ability to withdraw BTC and self store?
Again, a physical gold bank run, vs a BTC bank run are so massively different due to fundamental properties that this is a comically absurd threat comparison.
I don't think that would necessarily work with bitcoin. Fractional reserve banking works because bank deposits are fungible legal tender, regardless of what they are backed with at any particular moment.
With bitcoin, the only "authority" that confirms who owns what is the blockchain. Nobody would have to accept that you have made a bitcoin payment just because you transferred some bitcoin based credit that is not actually bitcoin.
Of course bitcoin derived credit/securities/IOUs can work. But it's not the same as bitcoin unless there are laws that ban making that distinction in some context.
> Fractional reserve banking works because bank deposits are fungible legal tender
Actually bank deposits at commercial banks are not legal tender. Only banknotes, coins and deposits at the central bank are. In most (all?) countries, individuals are not able to open accounts with the central bank. Interestingly this is not a rule set in stone. Some central banks like the Swedish Riksbank [1] are investigating the possibility to issue virtual currency to individuals which would be a legal tender and an alternative to bank deposits.
That’s nonsense. Only miners can create new Bitcoin. What Coinbase could do is to issue a financial derivative backed by Bitcoin e.g. a “Coinbase Penny” representing a 1/1000th of Bitcoins. And then could go on issue more of those pennies than actually backed by Bitcoins. But it wouldn’t be cryptocurrency if it wouldn’t run on a blockchain. Of course, the “Coinbase Penny” could collapse if we people stopped trusting Coinbase. Bitcoin wouldn’t notice like the gold price does not care whether a single US dollar is still backed by 24.057 grams of silver like it originally did.
It would work just fine unless there's a run on it. So long as HODLers HODL, nobody would ever notice. That's the premise of the whole proof of keys business. (https://www.proofofkeys.com/)
The core Bitcoin holders don’t want more coins, so it won’t happen. Simple as that.
The real elephant in the room is that new crypto currencies are being printed left and right. We may have a finite number of Bitcoin (in a couple decades) but one look at the list of crypto currencies will show that the number of crypto coins in general continues to explode at a phenomenal rate.
Why do the core Bitcoin holders have much to do with the decision? The decision here would be made by the miners, right? They have a different set of incentives from people who hold BTC. Maybe I’m missing something, I don’t see how holders and miners have the same interests.
First off, miners need to ensure that the coin they're mining retains value, so they need the network effect of the entire economy. No miner is going to make a decision that makes the underlying thing that they are mining worthless.
Even if 80% of miners wanted something, if it was egregious enough, like a change in supply, then no one would go along with it. Ecommerce companies like Coinbase etc would just ignore the fork and keep going with the remaining 20% of miners whose heads are screwed on straight.
Those 80% of rebel miners who are burning all that energy, and have all that sunk cost in hardware, would be stuck mining a nothing coin that no one wants, and would lose everything almost immediately.
Remember, miners have sunk costs. They, more than anyone, need the coin to retain value. Their incentives are incredibly aligned with everyone else in the ecosystem.
Miners have never had any reason to change anything in Bitcoin and will not change anything to this day. They make profit just by doing nothing and have been for a decade. They've held Bitcoin back from being much better than it is almost solely.
I hadn't thought about that before! Very slick incentive structure there...like, build the tech to go to space and mine it and become enormously wealthy on Earth (ignoring the amount of wealth required to accomplish this).
Honestly maybe it will fork, and maybe that will be a good change. We don’t exactly know how the dynamics of mining will play out in a post-block reward world, maybe it’s actually better to keep mining at the current block reward size indefinitely rather than decrease all the way to zero. Very slow fixed inflation is not necessarily that different than having a hard cap on supply. Gold is still being mined too.
If it forked in a way that completely defeated the limited supply and led to rapid inflation then it would massively tank in value and miners would lose a lot of money. That’s a pretty good incentive for them not to destroy it.
As far as bitcoin existential threats go, there are many of them - the energy cost, a 51% attack, so much concentration of mining in China, etc. Miners mutually colluding to destroy their own investments is not at the top of my list of worries.
Bitcoin definitely includes more than just the ledger. Without the miners, there would be no transactions, and without the intermediate processors, there would be no transaction intake. Without exchanges, there would be no value. Bitcoin is clearly a lot more than just the ledger.
It has already happened dozens of times and no one noticed. Probably the only such fork that anyone here has heard of is Dogecoin. And, that one only took off as a collective running joke.
> All it takes to "print" more Bitcoins is for the majority of miners to agree to make a fork that will allow for more. And that will happen at one point.
Why is this a bad thing? America's founders believed that the people could mint their own coins.
It's not intrinsically a bad thing (some may hold that opinion, though). However, if you are investing in Bitcoin because it is similar to gold in that scarcity is a primary attribute, then the ability to mint new bitcoins is dangerous.
I'd also posit that "because America does it" is a fairly weak argument for many of the claimed benefits of Bitcoin. Much of Bitcoin's charter is that it helps move away from government-controlled currency. If you think America's monetary system is the best option available, then Bitcoin likely is not your thing.
Why do we repeat the claim of Bitcoin scarcity when we all know it's just a promise and nothing more, there is no technical limitation?
All it takes to "print" more Bitcoins is for the majority of miners to agree to make a fork that will allow for more. And that will happen at one point.
As for Gold, good luck trying to mine an infinite amount of it.