When the block reward goes away…

Discussions of raising the maximum block size often turn into discussions of Bitcoin’s very-long-term future – “but what about when the block reward goes to zero” or “but how, exactly, will it all work if Bitcoin is used by billions of people per day…”

I’m going to upset a lot of engineers, but I think it is a mistake to try to predict what is going to happen that far in the future, and an even bigger mistake to spend a lot of time now worrying about what might happen ten or twenty years from now.

I’m inspired by F.A. Hayek’s “The Fatal Conceit”:

The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design.

To the naive mind that can conceive of order only as the product of deliberate arrangement, it may seem absurd that in complex conditions order, and adaptation to the unknown, can be achieved more effectively by decentralising decisions, and that a division of authority will actually extend the possibility of overall order.

‘Aha!’ you say: ‘Hypocrite! You’re proposing 20MB blocks, and that’s the very definition of centralized decisionmaking!’

Yes, that’s true– it is an attempt at a short-term compromise, to address the fears that, if left unchecked, the block size might grow too large for anybody but large companies or wealthy individuals to fully validate the entire blockchain.

I’ll discuss alternatives to that compromise in my next blog post.