What could Bitcoin do if the fees are not high enough to provide security?

This is a rough draft in progress…

The Security Problem

Bitcoin’s Credibility

Optional Security, for a price

The quantity of Tokens issued with each side-chain block could be set a few different ways:

  1. Set it to a constant inflation rate. (e.g. Tokens issued per year = 0.5% of existing tokens.)
  2. Vote on the issuance rate. Every transaction could set a value indicating that the inflation rate should be Higher, Lower or No Change and be weighted by days destroyed (e.g. Tokens in the utxo * (block height at destruction - block height at creation)) Voters have an incentive to maximize the protection of their transactions by encouraging people to peg in (keep inflation low) and by paying miners as much as possible (keep inflation high). They also have an incentive to pay as little inflation as necessary (keep inflation low.) Some aggregated opinion would likely keep inflation at a good level. If people are unhappy with the inflation level they are of course free to peg out to the main chain.
  3. Market based issuance adjustment. Over the last 2 weeks, did the number of Tokens (not counting issued Tokens) grow? Raise the issuance rate! Otherwise, lower the issuance rate.

Discourage free-riding

This is good for Bitcoin?



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