There are actually two types of bitcoin. Bitcoin is an asset that is volatile and has a finite supply. The second type of bitcoin is the protocol and network that keeps a bulletproof ledger and has not been hack. proofThe bomb proof The tank proof. I believe that the focus on asset is too great and there is not enough attention paid to the network, protocols and the immutable ledger.
When listening to an audiobook, you can: recent podcast Peter McCormack had with Dhruv Bansal The network was discussed in an entirely new light.
Dhruv presented a very interesting way to look at the bitcoin fixed supply. Both versions are simplified by the following:
Version 1: the Commonly Held View
These 21,000,000 will be distributed over a period of 131 years, from 2009 to 2140. Bitcoins have not all been released or created. As of March 2024 this theory holds there will have been approximately 19,659,000 bitcoin created or released, which represents 93.62%. The way to describe it in the present epoch is “6.25 bitcoin are created roughly every ten minutes.”
Dhruv’s view Version 2.
All 21,000,000 were created on 3 January 2009 via network, consensus algorithms, protocols and algorithm. As of this date, its monetary policies and supply was determined. All 21,000,000 already exist but have not yet been released or unlocked. Dhruv’s term “released” Signifies how many Bitcoins are created every ten minute. This is what I’ll use “unlocked” The rest of the story article Dhruv’s brilliant framing is further amplified by the use of this technique. Dhruv’s framework is familiar to Bitcoiners who are used to time locked bitcoin. In a way, Dhruv extends this idea. Time lock for Epoch 1 lasted for 210.000 blocks. The schedule ran for 210,000 blocks. next The timelock schedule for Epoch 2 ran 210,000 blocks.
What is the importance of Dhruv’s framing?
Mining as a business is not a good idea. Buy Coins rather than Created by It helps to make sense of the ever increasing difficulties. How can this supply of fixed 21 million coins be protected and human fraud prevented for 131 year?
The miners who are Created by Bitcoins then, it seems that they’re using more and more resources over time to produce fewer bitcoins. Bitcoin appears to be suffering from an “inefficiency of scale” — as bitcoin adoption grows, more resources are used in mining, and the cost of bitcoin production *increases* instead of decreasing, as we would expect in any other industry. Dhruv believes that this is one of the reasons why people are initially opposed to bitcoin mining. It just seems wasteful and stupid.
Conversely, if we think of bitcoin miners as *Buy Now* bitcoins from an existing supply [paid for in computations] It makes sense that miners are using more resources as Bitcoin adoption grows. This is because bitcoins increase in value and security, while the bitcoin network also increases. Dhruv says that this way of framing the issue could alleviate negative initial impressions some people have about mining.
Satoshi’s creation of distributed systems and a completely new timekeeping system is the reason why this frame makes sense. It’s not fair to give them/them/it/them enough credit! In Bitcoin Is Time Gigi points to the fact that in the absence a central authority, Satoshi was forced to create a way to keep track of time for a collection of computers. Satoshi selected ten-minutes as the desired block time. He enforced that through auction. As humans, we are very tied to the concept of time.
Bitcoin Base Layer has Two Markets
Dhruv posits two markets that are active in Bitcoin at ALL TIMES and make up its base layer. The Layers zero and one.
The security and monetary policies are enabled by layer zero, and this is done through math and codes at the auctions that occur every block. These take on average ten minutes. Each block has had an auction since the Bitcoin Network was created on January 3, 2009. The asking price is fixed. [measured in computations] Selling the next The Bitcoin tranche There are already existing To the global mining industry for bitcoin. This is a great example of collaboration! There was not a bitcoin mining industry when Satoshi and Hal were the only two miners.
The global bitcoin mining industry should be referred to as the Bitcoin security layer. But that’s a different topic. article. Dhruv explains that it is not a “two sided auction where you get this many coins for this many computations.” Bitcoin mining is a huge industry [timestamp servers] Calculate the price Collectively, There are this many coins in that block. The number of coins is this. [depending on the epoch] This many calculations and the network will wait to unlock it next Batch of coins is a way to wait until a lucky miner meets the minimum computation price.
The guessing game is persistent. proof You can also find out more about the following: work All the servers that are connected to the Bitcoin network use time stamps. The Bitcoin network is so secure because of this. These timestamps servers eventually will be replaced. “wins the auction” Dhruv’s framing is what earns block rewards. All time stamp servers are working to secure the network during that 10-minute period, but one server will win the block. This one time stamp is technically often part of a mining pool, but it doesn’t matter. article. If the network did too many calculations or not enough, then it would take more than 10 minutes to complete the BID.
It is the network protocol that tracks and notes these 2016 auctions within this 2016 block period. He said, “Each of those times can be thought of itself as a bid. The entire industry is offering these bids in sequence and the network pauses and says ‘what were the most recent bids in time?’ and readjusts the price it pays the miners (the security force) so that the bidding time matches the target time.”
Bitcoin Layer zero, the main idea behind it is to create a marketplace between all of its users. The following are some examples of how to get started: The entire bitcoin mining network which is the layer of security for the network. Since 2009, this market has acted as a force field to protect the network at all times. Why do you call it a “market”? Dhruv is of the opinion that decentralized systems are all markets. work. [In this case Layer zero is a collective market that involves computations for the timed release or unlock of bitcoin. And, additionally this collective market provides security services for the timechain.]
What’s the Core Trade on Layer Zero?
What are the main trades on Layer Zero? Bansal: “it’s computations for bitcoin.” The layer 0 of the a “market between two aggregates.” This is a marketplace between all bitcoin networks [who want security] The entire Bitcoin mining industry wants security and block rewards. Only two “participants” In this layer. The market in question is related to another one. [Layer 1] This is the block-space market. Bob Burnett also said this, but in a slightly different manner. He pointed out that there are actually two types of scarcity when it comes to bitcoin. Layer one is what we can refer to as the Bitcoin final settlement and transactions layer.
The Layer Zero solution solves how to distribute a set amount of money in a fair way. Use the network to secure it until 2140. proof You can also find out more about the following: work.
How do I make sure that transactions are finalized and ownership is changed on a ledger immutable? Every market is constrained by artificial constraints. The layer 0 represents the number of coins that have been released over 131-years. Layer 1 refers to the size of the block or its space. A market is what Layer 1 represents. How much will the user pay in order to have this transaction included into a block.
Sometimes blocks are mined with zero transactions. For those who believe “how wasteful,” Think again These blocks demonstrate the importance and existence of security layers. The fact that a block has zero transactions shows there’s a Layer Zero market, and ignores Layer 1 markets. [It also reinforces Dhruv’s point that there are two markets.] As bitcoins are distributed, Layer Zero will disappear. The Layer zero market is not needed. Layer 1 will then be the sole market for base layer. Bitcoiners are of the opinion that the fees from transactions will continue to be enough to protect the Bitcoin network for many years to come. In theory, the Layer 1 market will secure the unchangeable ledger and make sure that nobody cheats.
Many people think that the transaction costs are not enough to encourage miners to keep mining. But there are actually two markets and Layer Zero, which is the first, has a lot of work to do.
Already, the incentives for mining are very strong [there are something like 20 publicly traded companies] These incentives continue to grow stronger. Many bitcoiners run their miner for heat and have strong incentives to keep going even when the Layer Zero market is no longer needed. Entrepreneurs are looking to create businesses around timestamp servers. These servers will be used to heat pools, hot water, rooms, homes, and buildings, and provide electricity for people who do not have it. It is my prediction that by the year 2020, there will be a lot of people who have no electricity. next In a few years, appliances will be designed for the amount of heat that they generate.
Miners also search the world for free energy sources, such as methane mitigation, wasted energy and stranded power. They may even use waste tires to generate fuel. source. There are nation states who are mining Bitcoin. If you have a large amount of bitcoin, there will be plenty of incentives to continue mining as long as nation states devalue their currencies to zero AND the network value continues to increase. There is also a form of technology known as OTEC which I believe will prove to be an energy breakthrough that can work near the Equator thanks to bitcoin mining.
Bitcoin is one layer of the markets. The first two markets are run independently. Layer 2, which is currently being constructed, is designed to provide fast settlement and payment. The security layer is Layer Zero. Layer one is the layer of final settlement. The medium of exchange layer and the fast settlement layer are on Layer 2.
You can ignore these concepts or let us know if you have any gaps in your thinking. You can rest assured that math and free markets will secure your bitcoin. [instead of central bankers] The trend is expected to continue in the near future.
Dhruv bansal has been a great contributor to this article. article.
Mark Maraia is the author of this guest post. The opinions expressed by the authors are their own. own BTC Inc. does not endorse the views expressed in this article. Bitcoin Magazine.
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Source: bitcoinmagazine.com