[Research] Bitcoin After Block Rewards : preventing miner's deviation when the Bitcoin rewards is zero

The discussion on the future security of Bitcoin post-block rewards critically examines the adaptation of the Bitcoin network as miner incentives shift solely to transaction fees, following a decrement to zero in block subsidies. The original paper by J. Lee presents a detailed analysis of miner behavior under these new economic conditions and suggests protocol-level solutions, such as an EIP-1559-inspired base fee, to stabilize miner incentives and maintain network security.

Lee's study reveals that even a minimal increase in private gains from dishonest activities could disproportionately incentivize miners to deviate from honest behavior, potentially destabilizing the network. The empirical evidence around the 2024 halving underscores a significant drop in miner revenues and suggests that without effective intervention, the trustworthiness of the blockchain could be compromised. However, the response to Lee's findings critiques the static nature of the hash power model used in the study, which does not account for dynamic changes in mining power or potential strategic behaviors like entry and exit from the mining market.

The reply further elaborates on the limitations of maintaining a static approach to network security when external economic factors are fluctuating. It introduces a more dynamic and layered strategy for securing the network, highlighting the importance of reserve capacities that remain undisclosed but can be mobilized in response to attacks. This 'elastic' defense strategy is based on deterrence through ambiguity, where attackers cannot predict the actual cost of an attack due to unknown defensive reserves.

Moreover, the critique stresses the need for enhanced observability within the network to effectively deploy reactive defenses. It argues for a system where blocks must be widely witnessed and verified before acceptance into the chain, proposing mechanisms such as value-scaled confirmation depth and witnessed propagation as validity conditions. Such measures aim to ensure that any potential attacker would have to overcome not just the computational work but also the broad visibility and verification by the network, making deception significantly more difficult.

In conclusion, while Lee’s paper successfully outlines the impending challenges for Bitcoin post-subsidy and proposes initial solutions, the responding critique calls for a broader framework that incorporates both economic and epistemic elements of network security. The suggested hybrid models combining base fees with strategies for dynamic, stakeholder-funded security layers offer a comprehensive approach to sustaining blockchain integrity in a subsidy-less environment. These recommendations push for future research to explore these complex interactions further, aiming to refine and potentially integrate these strategies into the operational fabric of Bitcoin’s consensus mechanism.