Hourglass V2 Update

The discussion revolves around the proposition to mitigate the potential market impacts of quantum attacks on Pay-to-PubKey (P2PK) coins within the Bitcoin blockchain. It is suggested that by adjusting the distribution of bitcoin rewards per block, the effects of these attacks can be significantly lessened. The current scheme introduces approximately 450 bitcoins into circulation daily through block rewards. A proposal is made to reduce this number to about 144 bitcoins per day, aligning more closely with post-quantum security measures and reducing the incentive for attacks.

One method to achieve such regulation involves tying the release of P2PK coins directly to the coinbase reward structure. This would mean that P2PK coins could only constitute a certain percentage of the coinbase reward, which includes both the block reward and transaction fees. By doing so, the system ensures that the introduction of new coins remains proportional and controlled, limiting the ability of attackers to exploit the quantum vulnerabilities of P2PK addresses.

Further elaboration on this concept introduces the idea that, should the reward system focus solely on the basic block reward, excluding transaction fees, the issue of P2PK coins would naturally conclude once all bitcoins have been mined. This outcome is based on the premise that there cannot be a negative issuance of coins. However, concerns are raised regarding the potential for large miners to manipulate this system by converting their own coins into fees, thereby circumventing the intended restrictions and unlocking additional P2PK coins for personal gain.

The conversation underscores the importance of carefully considering how changes to the blockchain's consensus rules could address vulnerabilities exposed by quantum computing advances. It also highlights the need for solutions that not only prevent exploitation but do so in a way that harmonizes with the underlying principles of cryptocurrency issuance and distribution.