TITLE: BITCOIN IS DEAD, LONG LIVE BITCOIN

INTRODUCTION

In the realm of digital currencies, Bitcoin has become the gold standard, commanding immense respect and a dedicated community. Still, depending on who you talk to, Bitcoin ranges from immaculate to wrecked. The following is a thought experiment that presupposes the truth lies somewhere in between and what we might do about that.

CHAPTER 1: UNLEASHING THE POWER OF TAIL EMISSIONS: SOLVING THE TRANSACTION COST CHALLENGE

Remember the Blocksize Wars? I can’t say I was a part of them, but from the sidelines, the implementation of a tweak like Taproot reveals a willingness to change and the associated potential for resilience. How hard was that? And how surprised are we the changes led to BRC-20s? That said, we’re approaching 15 years with Bitcoin. Forgive the heresy, but isn’t it likely we will eventually need a change bigger than a tweak? A change that strikes at the very core value proposition, the deal if you will, the whole poitn that attached so many. So, here we go again – let’s change the 21-million hard cap!?! Bitcoin's scarcity and fixed supply are foundational to its value proposition. Pure core concepts, biblical. That said, the 21-million hard cap comes with a question that could end the whole thing. Bitcoin pays for its security and other functionality by issuing new coins to miners. According to ChatGPT:

The Bitcoin halving, also known as the "halvening," is an event that occurs approximately every four years in the Bitcoin network. It is a programmed reduction in the rate at which new Bitcoins are created and awarded to miners as a reward for validating transactions and securing the network. The halving is encoded in the Bitcoin protocol and is designed to control the supply of new Bitcoins entering circulation. Specifically, the block reward, which is the number of Bitcoins miners receive for successfully adding a new block to the blockchain, is cut in half during this event. Initially set at 50 Bitcoins per block, the first halving in 2012 reduced the block reward to 25 Bitcoins. The second halving in 2016 further reduced it to 12.5 Bitcoins, and the third halving in 2020 brought the reward down to 6.25 Bitcoins. The purpose of the halving is to create scarcity and ensure a predictable and controlled supply of new Bitcoins over time. By reducing the rate at which new coins are issued, the halving introduces a deflationary mechanism into the Bitcoin ecosystem. This contrasts with traditional fiat currencies that can be subject to inflationary pressures due to unlimited money printing.

The halving has a significant impact on Bitcoin's economics. As the block reward decreases, miners receive fewer new Bitcoins as their reward. This can influence their profitability and potentially affect the network's security if mining becomes less financially viable. However, it also has the potential to drive up the price of Bitcoin due to the reduced supply entering the market, which has been observed in previous halving cycles.

Overall, the Bitcoin halving plays a crucial role in maintaining the scarcity and long-term value proposition of Bitcoin. It is an event eagerly anticipated by the Bitcoin community and often sparks discussions and debates about its potential effects on the network and the broader cryptocurrency ecosystem.

Here’s the truth, nobody knows if Bitcoin will survive past 2140, once the last coin has been mined. It’s one of those inconvenient truths. Bitcoin security might not be able to be paid for by transaction fees alone and without new coins, Bitcoin might fail. And, while 2140 is ages away, and the Ordinal Theory and BRC-20 explosions show that even small changes might solve the transaction problem (hot-take: NFTs and BRC-20s won’t), uncertainty is an anchor. So, we arrive at tail emissions that allow for the creation of new coins to ensure Bitcoin continues.

CHAPTER 2: EMBRACING EVOLUTION: MEET THE BITCOIN DAO

I look at the immutable 21-million hard cap as a dirty little secret. In my humble opinion, its biggest strength is a meme that communicates “number go up”. Possibly the most important driver of mass social consensus that powers Bitcoin. And for this reason, any attempt to address scalability challenges with tail emissions has always been a non-starter.

Maybe this is a Sisyphean task, but here’s the thought experiment, the plan:

-     Step1) Offer a BRC20 that provides access to a DAO and issue it to key stakeholders – miners, devs, politicians, VCs, economists, etc.

-     Step2) The DAO announces it will launch a fork of Bitcoin mirroring current Bitcoin ownership. For the purposes of this article, let’s (unfortunately) call it BitCoin.

-     Step3) The DAO holders will be voting on tail emissions/burns that likely range between +5 and -5%. Maybe they will vote to make it programmatic. Maybe they will vote to make it based on the weather. Maybe they will vote to disband the DAO post-launch. That’s for debate in and out of the DAO.

-     Step4) Then you launch BitCoin – or maybe change Bitcoin.

CHAPTER 3: THE RISE OF DAOS AND THEIR IMPACT ON DIGITAL CURRENCY

When Bitcoin emerged, the concept of DAOs and DAO tooling had yet to materialize. However, the rapid evolution of the cryptocurrency landscape has ushered in a new era, offering an extraordinary opportunity to level-up Bitcoin through DAO governance. I get it, some believe the whole point is to evolve beyond intervention. An immutable, predictable, and thus fair money. And maybe the DAO should fold up post-launch or cancel the launch altogether. Maybe, like the halvening, a DAO-like council with limited control could be summoned at a predictable cadence. Should we allow for some of the collective wisdom and interests of the community to shape the future of the protocol? Could that approach align with the principles of transparency, inclusivity, and fairness, in a way that offered a more solid foundation for BitCoin's journey?

CONCLUSION

Thanks for playing along with this thought experiment. Alas, I am too busy with www.cambrianprotocol.com to push this. No doubt many many Bitcoiners will rejoice at that. Or that my lack of influence and soft power will ensure this post is ignored. I’ll add, I’ve always been more interested in digital value than digital gold, not to mention that I don’t have the chops to debate the execution of tail emissions. But I love alignment games. Did you catch this one? We replaced the dirty little secret of a hard cap with the dirty little secret of a DAO that will drive number go up. Yes, this is just a hard fork. But it is also a gambit. Trade the hard cap for a greedy DAO to defend against the risk associated with not having coins to pay miners. The BRC-20 piece is cute because we pay for this using Bitcoin. That feels closer to the immaculate than the wrecked. And, heck, the BRC-20s could make you richer than Bitcoin if you trade them right. I love Bitcoin. We’ll all be long gone by 2140, but hopefully, the coins we leave to charities, loved ones, and lost hard drives won’t be.

EPILOGUE

Gotta love an epilogue… Do you know when you write an angry email and then rest, read, and delete it? I guess the thing is why not post this? Why not suggest this? Sure, it’s not fully baked, but my interest in Bitcoin has long since drifted and my boredom with maxis has certainly calcified – but I love Bitcoin. Sure, this is entirely unlikely because the forks always lose, but that’s only true until it isn’t. Why do we have to surrender to a group of people who think Bitcoin was immaculate? Why can’t an upgrade make something better? In the end, we do have the choice to eat what is on the fork. If the hard cap ironically wrecks Bitcoin, that fork might be the only meal we’ve got.