El Salvador abandons Bitcoin as legal tender

The trouble is, it needs to be more than that if it is to survive. Since inception, mining has mostly been subsidized by new bitcoin, which is capped by design (and about 95% distributed).

Satoshi’s paper assumed that transaction costs would make up for the exponentially declining subsidy, but that hasn’t really happened since it never lived up to his “digital cash” vision.

Ethereum solves both of these issues. It is an entire platform designed for the development of distributed applications and will probably win over BTC in the long-long-term.

I'm so curious what will happen as mining approaches the asymptote. When the mining rewards become more and more rare and if people aren't incentivizing the network with a lot of transactions, will transaction times just get slower and slower until it becomes a stranded asset?

Transaction times are independent of mining power. One block every ~10 minutes.

> The trouble is, it needs to be more than that if it is to survive.

But why is it necessary for it to survive? Like, I think even cryptocurrency true believers would acknowledge that there are better cryptocurrencies out there if you want a currency; bitcoin seems at this point of largely symbolic value.

I’m not talking about losing mindshare, I mean in the literal sense that transaction volume is necessary for Bitcoin to avoid an attack on the network. The incentive system that secures it is designed to increasingly rely on transaction fees increasing over time to make up for the diminishing pool of unmined Bitcoin that currently subsidize network security.

That largely hasn’t happened; transaction fees have dropped as it became a store of value and moved less frequently (and increasingly moved off-chain in tradfi rails).

Yeah, but what I mean is, if bitcoin went away tomorrow, why would anyone care? Advocates of cryptocurrency as currency, I think, have largely already gone beyond bitcoin in any case at this point, and the speculators could just move on to the next speculative asset.

No. Ethereum is a solution searching for a problem. Have you seen any widely used successful application developed using Ethereum?

There are tens of billions of dollars locked up in DeFi ecosystems with hundreds of millions of dollars worth of assets exchanging hands daily, but you would probably just say that it doesn't count for some inane reason.

Tokenized stocks are coming this year.

But as the block rewards diminish from halving it will approach 0, so that will leave the only incentive for "miners" to secure the network to be transaction fees. At that point transaction fees will have to be extemely high to justify all that hash power right? So I can imagine it could get to the point where transaction fees exceed the value held in some wallets and you get stranded assets.

Alternatively, if transaction fees stay low, there might be very little incentive to secure the network with hash power and you could end up with fewer and fewer miners controlling the network and a 51% attack becomes quite feasible.

I'm really curious how this will play out over the next 100 years.

Why does it need to be more than a store of value? If every single country In the world is off the gold standard and inflates their citizen's savings away at a whim, why does Bitcoin need to be more than a way to keep your savings safe, especially if it's the best way to do so with the least amount of government meddling.

Running the Bitcoin network securely is expensive. Currently, about 95% of the cost is covered by issuance of new Bitcoin, but the amount of remaining Bitcoin decays exponentially (currently it’s down to the last 5%).

The incentive design of Bitcoin assumed that it would be used as cash, so that transaction fees could take over as the main source of revenue for the miners that secure the network. As a “store of value”, it doesn’t generate enough transaction fees to secure the network.