What it means for bitcoin#Plebchain

From an economic standpoint, Jevon’s Paradox is arguably the foundation of the scaling road we have started walking down for Bitcoin. Pushing things off-chain is attempting to make the use of the scarce resource that blockspace is much more efficient to accommodate a materially larger user base than the blockchain can facilitate on its own. Jevon’s Paradox states that in the presence of elastic demand for something, when the efficiency of using that thing increases, i.e. the cost per use decreases, the aggregate demand for that thing among participants will increase.

The typical example given is the fuel efficiency of cars. If cars suddenly become twice as efficient at using gasoline, people will travel more as the cost of travel has been cut in half. With people traveling more often because the cost to the individual has lowered, the net increase in demand for fuel can exceed the original aggregate demand for fuel before the gain in efficiency was realized. This is the point where the paradox occurs, aggregate demand surpassing what it was before a realized efficiency in the use of that thing.

This is the entire economic thinking behind why second layers are a viable solution. One of the huge contentions from big blockers during the Block Size Wars was that going off-chain will essentially steal money from miners and undermine the game theoretical stability of miners surviving purely off of transaction fees in the distant future. The factor they completely ignored during those debates is Jevon’s Paradox, and many of them still to this day completely ignore this dynamic.