Pierre Rochard, founder of consulting firm Bitcoin Advisory, has addresed a debate in the bitcoin community over whether transaction fees will be high enough to support the network’s continued use.
Bitcoin Inflation Debate
According to Rochard, who is also a self-proclaimed proponent of BTC’s scaling solution lightning network, the community must question whether transaction fees alone will be enough incentive for miners in the future. As outlined in the original white paper, bitcoin’s total supply is limited to 21 million coins.
While the final BTC is not expected to be minted until after the year 2140, the block reward will continue to decline over the coming century. Miners, who facilitate transactions and secure bitcoin’s network, will have to rely more upon transaction fees as a source of income, as BTC rewards continue to fall.
Some are now arguing that bitcoin may need to introduce perpetual inflation to remedy the situation, which would mean altering the original 21 million BTC total supply.
There’s an open question of will transaction fees be high enough – or in the aggregate total – enough to provide transaction finality...will bitcoin have to hard fork in inflation?
The Bitcoin Advisory founder asked the community to consider the state of altcoins, many of which operate on an inflationary protocol. Rochard acknowledged that confirmation bias may be clouding judgment in regard to bitcoin’s managed development and that the potential for inflation should at least be considered,
There’s confirmation bias. We’re all very bullish on bitcoin, I certainly am, and so we want to pick out arguments and facts that support our position rather than trying to see all sides of a debate and have a more balanced view. Or at least have some level of uncertainty and self awareness in how much support we actually have for our arguments.
Future of BTC
Rochard pointed to an article written in 2015 by Silicon Valley entrepreneur Ryan Selkis, under the name TwoBitIdiot, arguing that bitcoin needed inflation despite the controversy of the idea. He also pointed to the increase in block size from 1MB, which at the time was considered blasphemous to bitcoin’s protocol, as analogous to the idea of introducing inflation.
Rochard concluded that the bitcoin community has “a good 10 to 20 years to argue about it,” before inflation becomes a pressing issue.
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