"Bitcoin's security inevitably weakens over the coming years due to diminishing miner rewards (denominated in BTC)"
That's incorrect. Security scales with USD-denominated rewards, not BTC-denominated. And there are 16 years of real-world data showing they have been generally increasing, so a healthy sign that the Bitcoin experiment is working:
And not only that, but rewards are still expected to stabilize even when measured in BTC (thereby not relying on an increase of BTC's price) as they are progressively composed more and more of tx fees instead of newly mined BTC.
It's puzzling to me why some still don't understand the systemic incentives that make all this work as it has for 16 years and counting...
> It's puzzling to me why some still don't understand the systemic incentives...
Then I guess you're the type who will be really surprised to learn that with diminishing rewards comes increasing consolidation.
> ... that make all this work as it has for 16 years and counting...
That's convenient way to memory hole the market flash crashes, network forks, the blocks mined without consensus, and everything bad that happened over that timeframe.
Is a store of value that requires a significant fraction of it be eaten up by transaction fees to maintain security going to be actually useful in the long term?
With regards to transaction fees, bitcoin is already not particularly useful today. It can make sense to be used as an alternative to wire transfers where you only occasionally send a transaction, but it isn't useful as a currency and any day to day transactions have to happen off chain and not use bitcoin at all.
transaction fees are not increasing though, so they can't offset miner rewards. they have been in the $100k-$200k per day range for a long time, with only occasional breakouts: https://www.blockchain.com/explorer/charts/transaction-fees-... and the trend is not to the upside. in fact with the arrival of ETFs in 2024 the trend is clearly downwards.
Making up a bigger fraction doesn't mean that transaction fees will increase over time.
For L1 fees to actually increase over time, we need increased L1 throughput. Without that, increased demand for transactions causes more batching of transactions (mostly between exchanges).
Given the failure of BCH for pseudo-religious reasons I don't have much hope.
But transaction fees reset to zero on each block. If relying solely on transaction fees, why would you mine if they are zero? So, on the start of each block, miners will shutdown, or perhaps switch to a different currency where it would be profitable to mine. This surely weakens the security of Bitcoin.
That's incorrect. Security scales with USD-denominated rewards, not BTC-denominated. And there are 16 years of real-world data showing they have been generally increasing, so a healthy sign that the Bitcoin experiment is working:
https://newhedge.io/bitcoin/block-reward-per-block
And not only that, but rewards are still expected to stabilize even when measured in BTC (thereby not relying on an increase of BTC's price) as they are progressively composed more and more of tx fees instead of newly mined BTC.
It's puzzling to me why some still don't understand the systemic incentives that make all this work as it has for 16 years and counting...