bitcoin-dev
ossification and misaligned incentive concerns
Posted on: November 5, 2023 17:25 UTC
The email delves into the critical role of miners in ensuring the security of Bitcoin's Store-of-Value property.
It highlights that while private keys are indeed private and the network is fully validating, miners play an indispensable part in maintaining the purchasing power of Bitcoins. This assertion underscores the fact that miners contribute to the integrity of the cryptocurrency by keeping its value protected.
Furthering this point, the message draws a historical parallel with the Yapese of Palau and their use of Rai stones as a form of currency. The introduction of iron tools and European ships allowed the Yapese to manufacture larger Rai stones more easily, but as a result, these newer stones were deemed less valuable than the older, smaller ones. Through this analogy, the idea is conveyed that easier "mining" or production can lead to a decrease in value, which in turn emphasizes the importance of miners in managing the creation process and thus securing Bitcoin's value.
The sender of the email uses this example to challenge any narratives that underestimate the value that miners add to the security of Bitcoin. By showing how changes in the way a currency is produced can affect its worth, the email aims to illustrate the essential function that miners serve in sustaining the digital currency's value over time. In doing so, it reinforces the notion that the contribution of miners goes beyond processing transactions, extending to the safeguarding of the currency's core property: its store of value.