In Bitcoin’s early days, most discussions took place in the Bitcointalk forums.
Many early posters were technically savvy and brilliant. They share their insights into what the future might look like for the industry. One such poster was QuantumMechanic.
Some of the ideas expressed by this account in 2011 have already come true. We’ll explore these ideas now:
- Bitcoin’s prospects when mining rewards diminish to a transaction-fee exclusive network
- Address blacklisting (OFAC)
- PoS and DPoS
- Deterministic wallets and address reuse
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Bitcoin was released to the world in 2009 through an email newsletter.
The first public message board was created shortly afterward. Bitcointalk.org quickly became the central hub for discussion and a meeting place for idea-sharing in the space.
One of those early users was QuantunMechanic. He joined in 2010. His first message discussed a problem Bitcoin could encounter in the long term – what happens when miner incentives become heavily weighted towards transaction fees?
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There will only ever exist ~21 million bitcoin. If conditions stay the same, the final rewards will be mined by ~2140.
Miners are paid in block rewards. These rewards are comprised of bitcoin and transaction fees. We are in the fourth reward era, and each Bitcoin block reward releases 6.25 BTC to the winning miner pool.
Reward era seven will be the first to produce blocks with less than one BTC as a reward. From there, the rewards will continue to dwindle until the final bitcoin are mined. This is estimated for reward era 34 — roughly 110 years from today.
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The value of the Bitcoin network is in its security. Miners propagate blocks to ensure previous transactions are irreversible. Computing power ensures the network and chain move forward and only forward.
So, what do miners get for helping secure the network once the bitcoin reward is too small to matter? Transaction fees will become a more significant percentage of the block reward.
None of this is a secret or needs to be figured out after the fact. This is how Bitcoin was designed and built to function.
Still, QuantumMechanic was ahead of his time with this question:
When most of the world hadn’t heard about Bitcoin, and many were still wrapping their head around it, QuantumMechanic was assessing potential scaling and security problems.
So what’s the answer to his question? That’s been discussed and analyzed a lot over the years. Some think it can’t work, some that it won’t matter by then, others think it won’t matter.
I don’t know, but here’s a link to that early thread. The first response to QuantumMechanic’s question was by Satoshi. He cleared up one of the misconceptions about the possible slowing of block production as the number of transactions added to the block increases.
In summary, here is the underlying foundation for Bitcoin’s long-term success:
The network needs to stay on and continue producing blocks for bitcoin to have value. For the network to stay on and produce blocks, there must be incentives for the resources invested. As BTC rewards diminish, and transaction fees take a more significant percentage of the block reward, those fees have to grow to be large enough incentives. Transaction fees increase is a function mainly of the number of transactions in a block.
Will Bitcoin be successful 100 years from now? Share your thoughts in the comments.
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Do you remember the narrative that Bitcoin wallets and transactions were anonymous?
In some ways, they can be. But it takes a lot of work. Make a mistake, and your anonymity is gone. Connect the address to an account at a centralized exchange? There goes your anonymity.
An address being linked to an identity is not the only related concern. Users can be impacted by measures taken against their addresses. Blacklisting is a typical example — a practice that shuns addresses and their tokens.
The founder of the DeFi anonymity platform Tornado Cash was recently arrested. The GitHub repo was taken offline (and recently returned). Tornado Cash is a ‘mixer’ service for tokens to help anonymize transaction flow. Send tokens to the contracts, and the assets are spit out elsewhere. On-chain activity shows the tokens entering a Tornado Cash address as one of many transactions to the same address. The outputs from there can be analyzed to help estimate where tokens originated. But there isn’t a direct and clear link between origin and destination addresses.
As part of the legal intervention of Tornado Cash, OFAC blacklisted addresses that interacted with the contracts. They also sanctioned services like Circle (USDC). Some celebrities even had their addresses blocked for their NFT activity if their accounts were somehow connected to sanctioned services.
Wallet address blacklisting is not a new concept. Bitcoin addresses have had their crypto assets blocked and seized by centralized services for at least a few years. But before that in 2011, QuantumMechanic foresaw the potential issues.
Address blacklisting is a practice that won’t be going away. The evolution of that side of the ecosystem is more surveillance and control, ie, CBDCs.
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QuantumMechanic also foresaw possible issues with PoW and the potential need for PoS and DPoS mechanisms. Those designations didn’t exist at the time.
Here QuantumMechanic not only envisions PoS and DPoS but also suggests they could overtake a PoW network in the long run.
It makes you wonder who this account was.
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Today you take for granted the ease of use of crypto networks. There’s a long way to go, but we’ve also come a long way.
You create a new wallet through Metamask and click to add many accounts, all linked to the same private key. All while the master public key is kept secret. It wasn’t always this way. In 2011 QuantumMechanic described an idea for what is deterministic wallets.
Early Bitcointalk threads are a goldmine of foresight.
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That’s it for this one, but I want to hear from you.
Do you ever browse the Bitcointalk forums? Going back in time to read through early thoughts and predictions is awe-inspiring. What are some of your favorite threads?
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Until next time, from your premier Crypto/Web3 publication.
Max — The Crypto Climax
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