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The Security Budget issue and how the Bitcoin community approaches it is a mystery to me.

When I started with Bitcoin, whenever I didn't understand something, there was always some logical explanation. I just had to re-read the whitepaper, study the code, understand the Austrian school of economics, etc. Bitcoin taught me that "code is law" and predictability is its greatest strength.

But then I came across this Security Budget problem. Bitcoin's security costs billions annually, paid through block subsidy. The code says this subsidy goes to zero. The plan is fees will replace it. But after 15 years, fees cover only 0.5-1% of the security budget.

I went looking for the explanation. I re-read the whitepaper - nothing. I studied the economics - the math doesn't work. I asked the community - and encountered something I'd never seen before: pure cognitive dissonance and zero logical answers.

"You're spreading FUD."

"Security budget doesn't exist."

"Miners aren't CREATING coins, they're RELEASING them."

"That's not a problem at all."

This was the first really serious cognitive dissonance I encountered in the Bitcoin community. It forced me to think: do I want to stay in a community where identity matters more than truth?

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Discussion

tree 木 6d ago

I've been pointing this out for maybe 5 years now, within the Czech community and beyond. I never got an answer that would logically explain it - something that would give me confidence the transition from block subsidy to fees will actually work. On the contrary, as years pass, I see fewer and fewer reasons why it should happen at all.

I think the key is the real use of Bitcoin blockspace. Satoshi couldn't foresee how the Bitcoin community would evolve. He anticipated ever-increasing interest in using the blockspace. He assumed Bitcoiners would lead this new segment of decentralized finance, not stand in opposition to it. He hoped it wouldn't become just a religious cult and an extension of the current system, but a real driving force helping us get rid of banks and create something completely new. If that had happened, maybe fees would be increasing. Maybe it would make sense.

I really don't want to be a conspiracy theorist, but I wonder if the finite supply isn't just a test. Maybe Satoshi knew the only way for the current system to co-opt Bitcoin is to turn it into a speculative tool and divide it tribalistically. And maybe the 21 million cap is a self-destruct fuse - designed to automatically destroy Bitcoin if that's what it becomes.

If nobody actually wants to use the blockspace, if it's just a number-go-up tribal asset, then the security budget collapses when the subsidy ends. The system self-destructs. Maybe that's not a bug.

tree 木 6d ago

Satoshi wrote: "I'm sure that in 20 years (2030) there will either be very large transaction volume or no volume."

We're 15 years in. Fees cover 0.5-1% of security budget. That's "no volume" territory. 5 years left. How exactly do we get from "no volume" to "very large transaction volume" on Bitcoin L1?

Because Lightning Network, nostr:npub17fzkepv3q2szsvdefmws9znhhpzx9kvhgl2p3jqk9tm5z6sjalvsg49yxv , and every off-chain solution is actively reducing on-chain volume - the exact opposite of what Satoshi said we need.

Please explain it to me 🤔

https://bitcointalk.org/index.php?topic=48.msg329#msg329

Hynek 6d ago

It’s true that onchain usage is stagnating. But it keeps evolving. Ark and Spark are scaling while using onchain. Even lightning is on one hand reducing the need of many onchain transaction but creating dependency on it at the same time.

Nobody knows what is the reasonable security budget. Maybe it’s still too big.

nout 6d ago

I remember many blocks in the last 6 years, where fees made large chunk of block rewards - sometimes even more than subsidy. And people barely noticed, some were a bit annoyed that things are slower and more expensive.