Peter Todd thinks Austrian Economists like Mises and Rothbard are wrong and money/Bitcoin can’t function long term without tail emissions/inflation. He’s not stupid. He’s economically illiterate, arrogant and pretty far off his field of expertise. Just because you’re brilliant in one field, doesn’t make you competent in all others.
If y’all want Bitcoin to stay purely a monetary protocol- then start fucking using it as money.
Before you read this take, know that my ideal scenario is monetary protocol only. Also know that I think it’s fucking dumb that nostr:nprofile1qqs8fl79rnpsz5x00xmvkvtd8g2u7ve2k2dr3lkfadyy4v24r4k3s4spremhxue69uhkummnw3ez6ur4vgh8wetvd3hhyer9wghxuet59uq32amnwvaz7tmjv4kxz7fwv3sk6atn9e5k7tc9vz57s got silenced for expressing a valid concern.
Here we go:
Hodling, sitting and waiting for NGU do NOTHING to increase long term demand for blockspace- which, in case you didn’t know, is needed to secure and stabilize the network once the block reward dwindles. This is what most people in Bitcoin do, unfortunately. This is why we started Conduit and why I’m personally hyper focused on marketplaces: if we can make global Bitcoin circular economies then there’s a chance this thing becomes self-sustaining and the phase change to zero block reward doesn’t result in fucking chaos.
So far, Nostr is the biggest circular economy here, and hate to say it, but since it’s all happening on Lightning we are barely moving the needle for base chain settlement demand. Surprised about empty blocks? I’m not.
Do all of you who disapprove of Core devs approach to increase block space demand actually use the blockchain for anything besides UTXO management when fees are low? Are you building anything that increases block space demand for monetary use?
nostr:nprofile1qqsve2jcud7fnjzmchn4gq52wx9agey9uhfukv69dy0v4wpuw4w53nqpr3mhxue69uhkummnw3ezucnfw33k76twv4ezuum0vd5kzmqpp4mhxue69uhkummn9ekx7mqx7hhq8 is not stupid. He’s been writing about long term instability for years: https://petertodd.org/2022/surprisingly-tail-emission-is-not-inflationary
Important quote:
“To date no proof-of-work currency has ever operated solely on transaction fees, and academic analysis has found that in this condition block generation is unstable. To paraphrase Andrew Poelstra, it’s a scary phase change that no other coin has gone through.”
He also created Opentimestamps which is severely under used in my opinion (NIP 03 would enable so many great features for a decentralized social protocol).
Neither is nostr:nprofile1qqs0w2xeumnsfq6cuuynpaw2vjcfwacdnzwvmp59flnp3mdfez3czpsprpmhxue69uhhyetvv9ujumn0wd68y6trdqhxgef0qy2hwumn8ghj7un9d3shjtnyv9kh2uewd9hj7wrtw00 stupid. Or anyone else involved in the current drama. They’ve probably thought this through more than most.
You think these people are evil and don’t care about Bitcoin’s long term health? Think again. They are being practical and doing something about the blockspace demand problem.
You don’t agree with how they are going about it? Then build something that increases demand for block space in the way YOU want it.
Or run Knots. That’s a great and valid way to express that view. I support it. But make sure you’re prepared for the consequences if you win this war (stay sat flow positive)- and probably consider using the base chain more, or participating in the Bitcoin circular economy (which means spending Bitcoin).
I find it funny how so many people here celebrated big money and big government when it came in and are now surprised these same parties are taking action to protect their investment. If you don’t do it yourselves, they’ll continue to do so for you.
Discussion
Mises et al never had a model for Bitcoin or the related technologies, and the associated incentives in maintaining that decentralized system. They had no idea about miners, block rewards, nodes, etc.
Austrian is great aspirationally, obviously I’m all about it, but even Mises admitted towards the end of his life that economics couldn’t perfectly model human action in dynamic systems. Bitcoin might not only represent a monetary good… it’s an evolving network secured by incentives that no classical Austrian ever had a framework for. We’re in new territory.
That’s where both of you are wrong. Rothbard even theorized about a scenario in which gold had a hard-capped supply and explained why it would still work as money. I’ve highlighted the parts directly correlated with some of Bitcoin’s (the protocol) properties to show you that although they couldn’t have predicted the shape or form in which Bitcoin would emerge, they totally had a theoretical framework for it.
While I appreciate the share and references, I think you’re assuming I’m arguing for tail emissions / supply inflation being a necessary economic condition- which I am not.
Please do me a favor: take a breath and read what I’m actually writing.
I’m saying the original Austrians did not, and could not have, predicted the dynamics of mining, diminishing block rewards, fee markets, network security, etc. The security of the fixed money supplies they theorized about was never in question. In Bitcoin these are major REAL LIFE system design concerns that need to be addressed for the THEORY to be valid. This is the paradox: Austrian is IDEAL but how do we practically achieve it without tradeoffs? We can strive towards it, and we may never fully achieve it, but I will remain naively hopeful and build towards it.
In the meantime, I support the openness of the protocol for people to express their views. Austrian or otherwise. I may not like some of them, so I build, support and evangelize the ones I do. But not dogmatically.
I did read what you wrote. Carefully. And what you’re doing is framing economic truth as aspirational instead of foundational.
You’re not explicitly calling for inflation, but you’re implying that the system may require changes to remain secure. That’s functionally the same intellectual position Peter Todd holds: that the protocol might need economic compromise to remain viable. And that’s where I draw the line. Austrian economics doesn’t just give us an ideal, it gives us a framework for what happens when you tamper with monetary foundations. For me it’s pretty obvious Satoshi designed that system around that framework and it’s been working pretty solid for more than decade.
The “paradox” you describe isn’t a paradox at all. It’s a misunderstanding of what money is. Rothbard made it clear: if the supply is fixed and demand rises, the purchasing power of each unit rises. That’s not a problem - that’s how sound money works. Whether miners are securing blocks or caravans doesn’t change that. The only thing that changes is your trust in incentives - which, by the way, emerge from human action, not protocol design. Austrians have that covered.
You keep saying “we’re in new territory,” but that’s just techno-mysticism. New tech doesn’t invalidate old truths. The scarcity of Bitcoin, the subjective valuation by its users, and the market-driven fee structure are all exactly the kind of emergent order Austrian theory predicts. The fact that it’s working despite these concerns validates the theory, not the other way around.
Finally, about openness: sure, people are free to experiment and opine, but don’t confuse that freedom with legitimacy. Not every protocol-level change is just a harmless “view.” Some ideas aren’t just bad; they’re economically incoherent and directly undermine what makes Bitcoin valuable in the first place.
You don’t need to be dogmatic to recognize that some roads lead straight back to fiat thinking. And the essential thing about Todd’s PR is directly undermining the purpose of Bitcoin, creating second order effects that can be modelled fairly easily. I don’t know what to make of him. I know for a fact he’s economically illiterate, but is he proposing this from a place of ignorance or a place of malice? I can’t say. His history and old statements don’t exclude the latter.
-there’s no such thing as economic truth, feel free to quote me on that
-I’m not saying the system needs to change, but rather that the people who care about it should actually use it. I am taking action to keep the system the way it is and use it as originally intended, not just sitting and circlejerking theory while others abuse it. That was the whole point of my post: put action behind beliefs.
-I’m misunderstanding money? You’re misunderstanding Bitcoin. It’s not a magic Austrian lamp that generates perfect currency- it’s a computer network built and maintained by humans with competing incentives. It’s the most impressive one ever built- but not invulnerable to attack. Like in the previous “war” people need to step up and fight for their beliefs. I like it as a monetary protocol, so do you- let’s do something about it.
Here’s a less saucy reply assisted by my own LLM, for what it’s worth:
For me, the key distinction here is that Bitcoin isn’t a pure economic theory — it’s an engineering implementation influenced by economic theory. That makes it inherently experimental. Protocol rules, network incentives, user behaviors — they’re all interacting in a real-world, adversarial environment.
I’m not saying Austrian insights aren’t valuable; they clearly informed Bitcoin’s design. But theory doesn’t equal guaranteed outcomes. A perfect theory doesn’t automatically lead to sustainable system dynamics. Human usage matters. Incentives matter. Behavior matters.
That’s why I keep emphasizing action: if we want Bitcoin to function as a monetary protocol long term, it has to be actively used that way — not just preserved as an ideal or a vault. Otherwise, fee markets won’t develop sufficiently to replace diminishing rewards. That’s not a moral argument or a policy recommendation; it’s just a practical observation about current dynamics.
I’m not calling for protocol changes, and I’m not advocating inflation. I’m advocating for participation aligned with the system’s goals, recognizing that usage is part of security. If we believe in Bitcoin’s monetary properties, let’s embody that belief through use.
To me, that’s not rejecting economic principles — it’s engaging with them through action.
Well I can’t really disagree with your LLM so it’s all good 👍