Topic: Bitcoin Monetary Policy But Things are Changing Now (Taproot) (Read 317 times)

Maybe it doesn't have to be like that? Maybe you do not have to join in the blockchain part of it. Just because it is decentralized, doesn't mean that we need to be the ones who are in charge for it, and we can just watch afar while supporting it and buying it.

Basically I have zero miners, never owned any, and I know that I don't have 32 eth to start helping with the PoS there for example, but I know that they are both decentralized and that's good enough for me. I do not need it to be something that I participate in order to make sure that it's decentralized, I can accept it the way it is right now and that's good enough for me, I just buy and vote with my money by holding the coins.

Well, I do agree with you that POW is better in the circulation supply management but I am discussing a point which is that one both models there is a controlled environment such as on the POW side the compute resources owners control the blockchain and on the POS side the Money holders control the market. A middleman like me who doesn't have many resources and Money can't contribute to blockchain decentralization because of these models.

Also, POW is directly targeted for its power consumption which is a big issue for the Bitcoin community, But we always neglect it. Some experts who support centralization and traditional markets target this point to prove Bitcoin is unworthy. The community is sticking to its ideology and continuously supporting good Bitcoin. This a sign for a big reform but what if we consider a solution for  Bitcoin power consumption?

Proof of Work is better than Proof of Stake as it requires physical resources to create new coins into circulating supply. With Proof of Stake, you can create new coins or tokens by investing in a node (Masternode, Supernode, Security Node, etc.) or amount of some coins or tokens and stake yours on network to earn staking rewards. It can be hacked, exploited to vote new Proposal. This algorithm makes such networks based on it is less secured and more vulnerable to exploitation.

The hybrid model PoW/ PoS is not new but we need to see it on big altcoins to know how good or bad it is in reality and on big main nets.

I was thinking in another way I would like to know what you think of the decentralization of the network with POS and POW because it is very clear that both have +1 points one is power efficient and the other is efficient in terms of security. Regarding the new switch we are talking about can you please elaborate on DPOS and Hybrid POw/POs are kind of such things which I have gone through theoretically but I am not sure where these machines are implemented. For Dpos I think EOS is based on DPOS.

Rest I would like yo know what senior thinks about it and why still we are unable to find such a solution..

If some day a new algorithm is invented that at least provides the security that PoW provides and offers enough advantages over it, I don't see any reason for bitcoin to not switch to that new algorithm. The thing is, we already know that PoS is severely flawed and adds more problems than it solves. This is why talking about such a switch is more like a joke. After all PoS was invented in ~2012 and failed then and there.

Ruining the purpose of Bitcoin from being electronic cash to force it into your view of being a mere asset, can only do more harm in the long term. This is why this spam problem should be addressed ASAP.


Also it seems that in the end 4mb blocks were made a reality, but instead of transactions, they are now filled with spam...

well, if you also want a system where censoring is impossible/expensive, then the two things will inevitably contradict one another, it's always going to be possible to somehow cleverly craft bitcoin transactions so that they contain data that can be decoded in a way that isn't a payment of BTC (or that a transaction contains some different data, AND pays someone)

there's nothing that can be done about the issue absolutely, but the tx fees mitigate it.

maybe if everyone knew how you use your BTC, then some people wouldn't like it? fortunately, because of bitcoin's anti-censorship properties, their only options are:

• be unhappy
• get on with their lives

i recommend the 2nd option, but some people seem to like feeling miserable

Well said, I know it's nearly impossible for the Bitcoin community to accept any type of POW to POS solution in the future. for the dirt, I would say sometimes you need to compromise with the circumstances.
As always antibiotics are not available haha also from the farmer's background in my society using such antibiotics is not preferred we feel better with "Desi Tootkas" following the medical instructions from highly qualified elders. Rubbing Tumeric is a better option.

Wrong. You can not create NFTs using Bitcoin protocol. It simply is not defined that way. The script complexity has also not changed in the way you think with Taproot.

What people mistakenly call "dominance" is not dominance at all. It is market cap ratio and it will not change like this as long as thousands shitcoins are being created with billions of [fake] circulating supply which would create fake market cap hence decreasing the ration which is btc_MC/(sum of thousands of MCs).

Fees always go up in all spam attacks. This time it is not different with Ordinals attack either.

It's like saying "rub dirt in your would if you want it to heal"

So, I don't want talking too much about smart contracts or any beneficial program after the taproot upgrade, If the block increase to twice, will it affect to bitcoin blockchain size data?.

I have a thread talked about size of hard disk data, I'm not outspoken if the blockchain data is too big to keep it while, I have enough hard disk to accommodate it. But if that smart contracts or NFT like you said burden to my hard disk, of course, I do not accept it, I just want bitcoin blockchain data only on my hardisk, not others smart contracts, nft or etc .

i dont mind speaking to people as if the are 5 year old ELI-5
but when they act like 5 years old that when they earn the descriptions i give them

at the millenium min wage was about £$5
and bought 4 loaves of bread

now its $15(3x) for the same work time.. BUT NOT 12(3x) loaves of bread.. instead its far less bread than the 3x multiple of dollar

..
yes hard drive data gets cheaper per GB so yes it deflationary
you get more data per dollar

..
bitcoin
as the value* goes up. you get less bitcoin per dollar(more goods per bitcoin)

and you again wanting to go extreme of total supply or other extreme of temporary price of 1 day shows you have not learned anything

inflation announcements are not daily or millenia
inflation/recession official announcements are for fiat, a 6 month call not a daily or a century

*also bitcoin value is not found at the top of a daily market. its based at the bottom of a period

value is the opposite of premium
and not evaluated on a spot market

i would say more but i think i should give you a few days to work out a few things and let your thoughts settle

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one little hint
PRICE is speculative and moves at the whim short term.
it can inflate and deflate

but dont confuse that with value
not confuse inflate deflate vs inflationary deflationary

the 'ate' is temporary the 'tionary' is periodic

as for value.. value is the opposite of premium. so value is found at the bottom. not the top
so looking to find if bitcoin is deflationary you have to look over a period of time of the periodic lows
not the silly things you look at

So Tesla shares are also deflationary, since in
in 2012 if you would have sold one share you would get 2 loaves of bread
in 2022 you would have got 600 loaves of bread for one share

Oh wait, even the USD is deflationary if we look at data processing costs


With 100$ you could get a 32 GB SSD in 2009
With 100$ you can get a 1TB drive now 

Oh but wait, since Bitcoin has lost value since 2021, does this mean it's sometimes inflationary sometimes deflationary and sometimes it has no clue what it is? 
Two weeks ago it was deflationary, two days it was inflationary and now is again deflationary 

so for 6 millenia gold has been inflationary hmm

so that means selling an ounce of gold in the 1970s would have got me more loaves of bread then .. than it does now

ok
well in 2012($4) if i sold 1 btc i would have only got 3 loaves of bread
well in 2022($17k) if i sold 1 btc i would have only got 2?1? loaves of bread
or.. what really happened is i would have got 10,000 loaves of bread

yep bitcoin gained value in 10 years. which is deflation

because mining cost only $600 an hour for 150 coins in 2012 (best rates)
because mining cost only $560k an hour for 37.5 coins in 2022 (best rates)

Except that the price is not falling at all:



Why? Do we have a right way in which we should all voice our opinions in unison? 
Take for example your view on the two communities coming together and granting more support to BTC  cause of NFT,
do you think that everyone is happy about this? Don't be so sure, maximalists don't like this at all, and it's not everyone be happy, let's all shake hands and sing chants together.
Even here some are really pissed at the turn of events, just check some topics and you're going to see what I mean, as I don't like to point fingers.

Anyhow, two things
- for now, Bitcoin is inflationary, every single day you have more Bitcoins in circulation, that's inflation. It's also inherently deflationary since at one point it will become so once the priting stops.
- the number of addresses with a balance is something normal since we get 900 new BTC each day and we still have usage, but number o-f addresses =/= people so you can't say for sure we have the same growth and not even be sure we do have it.

For many of the above replies, I would say 90% of the replies are taking the wrong direction, except a few ones.

The motive behind the post was to explain the narrative change regarding Bitcoin. Previously we all knew Bitcoin due to its monetary policy but now things are changing it is an indication of a change of mindset and investment approach. As previously a maximum of us invest in Bitcoin due to the Store of value role of Bitcoin but now and in the future there will be more reasons as well to invest in Bitcoin and Taproot is taken as an example approach.

The point is in the future rather than taproot there will be more and more reasons to invest in Bitcoin which is a positive approach in my view but some people consider it as a negative attitude due to the impact of the new features on the Bitcoins base but I am not sure on what basis they take it negatively.

@tranthidung thanks sir for the correct information until now I was considering Bitcoin as a completely deflationary model but things are clear now.

It has a fixed total supply but many bitcoins were lost. We can not get an exact number of lost bitcoin but can estimate it based on inactive UTXOs.

• Like I make an example of estimation on lost bitcoins there
• HODL waves

• Controlled supply
• Equivalent Network Time

It is not correct to say Bitcoin has a deflationary model. It is inflationary with time. Just has a significant less inflation rate than all fiat currencies. So bitcoin maximalists want to exaggerate it with the term Deflationary model.
Bitcoin Inflation vs. Time

The growth of Bitcoin market value will heavily depend on good/valuable  projects getting built within the network, more horizontally (like *side*chains) and less vertically . And they must be according to Bitcoin principles to be considered valuable and part of the Network.

No Proof of Stake (PoS) project will ever be part of the Bitcoin Network as that seriously violate the Bitcoin Principle. Beside, PoS is cursed evil/faudulent consensus mechanism. It will bring problems to the Network and should be rejected.
 A different PoW type could be used if they don't want the current one

We are living in the era of IOTs and humans made every possible things to be run as on automations so i wonder there remains any place for developers to not make such tools to automate difference between these transactions in this competitive market.

There are numerous websites or tools that will automatically differentiate between btc transactions and tell you at the spot either its segwit or taprooted.

• Blockstream.info
• Mempool.space
• Bitcoin Core--> well its almost manual because you have to enter some commands in order to get output.

Secondly, i would say, its hard to find taproot-base txids. because most of the users use segwit base system.

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For you OP, compilation seems to be good and clear, well i hope you could add why taproot is better than seg wit or any other proposal for bitcoin such as Graftroot and others, well i know these are not implemented yet but i hope thorough detail with sequence, make much interesting compilation.


I do not know maybe graftroot will do the work. well i am not as supporter of that proposal but L2 problems can be handled when the right time comes. because BTC is going to be decentralized. 

fastest way is the prefix.
bc1q=segwit
bc1p=taproot

a UTXO put into a transactions input to spend it does not actually show the "address" in raw blockchain data
it just shows the txid of previous tx and the output position it wants to spend

so you would have to look up the spending txid and find the output anyway

so the fastest way if your looking for an individual tx "type" is to just paste the spending txid into a blockexplorer and use eyes at the prefix
or you could try grabbing the input txid search block data for its output and do things the slower way

Really? I'm curious how do you determine which transactions are segwit or are taproot in the network. I understand you can click every TXID and use the difference in wallet address format just by  looking at the prefix. Is there a better or faster way for an average user to look at this?

the trick is

Legacy had a opcode byte, where certain operations with certain rules were formatted depending on the opcode used.

one of those was a "anyonecanspend" opcode, which was a "default: isvalid" AKA backward compatibility bypass

when segwit was activated it allowed segwit to then have some sub list of its own opcodes, after the legacy opcode byte
where segwit has its own "anyonecanspend" sub-opcode byte which is now used as a "isvalid" to allow taproot to have its own sub-sub opcode list

by the taproot activation happening it activated the "isvalid" which.. had no byte limit of witness junk after the opcode byte

legacy had limit bytes of (from memory) 80
segwit had limit bytes of (from memory) upto 10,000
taproot opcodes have under the certain code upto blockweight

people using using the bitcoin blockchain for large scripts has got nothing to do with taproot, using taproot for that incurs more expensive network fees than simply doing so with regular transactions

and taproot transactions are not causing the spike in transaction on the network, they seem to all be plain segwit txs (which shouldn't be such a surprise, as everyone's been slowly moving over to segwit for the past 5 years)


so your post sounds very weird, tbh OP

Probably not.

What seems certain is that miners are happier now.

It looks as if the NFT's are causing the price to fall, right?

Bitcoin, we all know still a small introduction: Bitcoin is the decentralized public ledger-based P2P digital payment system created by Stoshi Nakamoto back in 2009.

Monetary Policy

So before discussing the role of bitcoin as the monetary policy let's take out a quick and easy overview of the monetary policy.
So monetary policy is the actions or policies taken by the central authority, central authority can be the government or the Central Bank / State Bank. In monetary policy, the central authority controls the growth of the economy using different tools. In the financial market, the central authority imposes monetary policy to control the Supply of Money and Interest rates. All of this is done to stabilize the financial market and the growth of the economy.

Central authority is responsible for the unstable financial market, inflation, and any type of crisis related to the economy. The crisis may be less borrowing and spending due to the wrong monetary policy of the central authority by imposing high interests and monetary policy directly affect the economic growth within the country or organization.  

Role of Bitcoin as a Monetary Policy

Bitcoin is a decentralized asset and we all know that it is a potential medium of exchange. We also know that Bitcoin is the Future Store of Value. Let's see how. The Bitcoins Monetary policy allows bitcoin to be the most potential Future digital store of value can be known as the (Digital Gold). Not only Digital gold more than anything we need to be financially free.

• Fixed Supply
  
  Bitcoin has a fixed supply which ensures that Bitcoins monetary policy is perfect and secured in the long run from the point of view of the store of value. Time to Time inflation due to excessive supply is perfectly managed in the Bitcoins monetary policy.
  
  

• Controlled Circulation Supply
  
  Control of supply for the stable growth of capital is a very important tool of the monetary policy and we all better know that the Bitcoins supply control model is well established by the algorithmic event called BTC Halving where the block reward on mining is settled by ½ on every Halving.

• Deflationary Model
  
  We always heard about Bitcoin as a hedge against inflation and the bitcoin model is deflationary in nature let's figure out how it actually works.
  The Deflationary model of bitcoin is its strength, Bitcoin is all about the control of supply by the proper implementation of the Demand and Supply. The circulation supply of bitcoin is controlled by the Halving event which occurs approximately every 4 years. The first halving was in 2012 when the Block reward was reduced from 50 BTC to 25 and then in 2016 25 to 12.5 and after 2020 it was reduced to 12.5 to 6.25. Currently, the Block reward is 6.25 this way the bitcoin supply is controlled by the growth of bitcoin. This model provides Bitcoin the potential to serve as a hedge against inflation.
  These are the few points of the Bitcoin monetary policy and actually, there are bases of Bitcoins strength maximum of the Us actually looks into these points and feels safe while investing in Bitcoin. This allows Bitcoin to be the future Store of value and the perfect medium of exchange and we all agree on it. The community is supporting this particular narrative until now.

This above is a small part of the bitcoin's First view now things are changing considering the store of value and all this we know about the potential future of bitcoin.
But Now things are changing the Bitcoin network is expanding its limits in things are changing now particularly I am going to discuss the Taproot.

Taproot Upgrade

Taproot is a proposed upgrade on the bitcoin network to enhance the scalability and efficiency of the chain with some additional components including a new scripting language, particularly you can say that it was Tapscript.

In this upgrade, there were many new features and components including multi-signature transactions and many other things. My point of discussion is the adoption of Taproot and the features imposed on the bitcoin network after the Taproot upgrade in November 2021.

There were many features in the Taproot upgrade but now let's discuss the taproot adoption and its impact on the bitcoin network activity.


Taproot Adoption

As of now on Bitcoin, we can create NTfs and more complex smart contracts so now on the Bitcoin network due to these features the on-chain activity is increasing which is a good sign, and taproot adoption in the last few months increased by 9.4% as per glass node report. And its utilization has also increased by 4.2%.

Now, this is another approach of the Bitcoin network rather than the monetary role in the crypto market. Now Bitcoins network is approaching it sideways to increase the activity and attract a new audience. I am in favor of this but what others think I am not sure. The Taproots this upgrade is now impacting the Bitcoin on-chain stats like

Increase in the Block size

Normally before the taproot upgrade the average size of the Block was between 1.5 Mb to 2 MB MB but now the size has increased to twice of the previous numbers which are due to the Tapscrip. When we create the more complex smart contract or NFTs it automatically increases the size of the block and with the increase in the Block size, the demand for blocks in a specific time is also increasing. The sum of all story is now Block demand is increasing which is indicating an increase in activity and in the future my observation is the Transaction fees is going to be high due to higher demand and activity.


Impact of Side growth of Network.

We know that images have both brighter and Darker parts. As with the increase in the Taproot, the adoption Bitcoin network is growing with a new type of community which is the NFTs market and other protocols which is increasing activity and this new community is the reason for the future market capital increase and dominance of Bitcoin.
Before that, there was a community supporting Bitcoin due to its monetary policy and now there is another community supporting and also going to support Bitcoin due to its new Utilization features.


How are you Watching it?

In my view, this is a positive approach as the total number of non-zero wallets is increasing which means the community is growing and as much its community grows, the bitcoin market value grows. But on the hand, the transaction fees may increase more in the future as now the average of transactions in the pending pool is increasing. It might lead bitcoin to the same issue as EARTH was facing before. If it happens then what is Bitcoin is going to find out a new trend of L2 projects on Bitcoin or shifting the POW to the POS as in my view if it happens it will greatly damage the bitcoin reputation. Most of the community supports bitcoin due to its decentralization but if Bitcoin changes its Network from the POW to POS then centralization is going to be a big challenge for the community.    

Note: All the information written and compiled by myself is my own observation based on current circumstances, I would like to know my fellow Bitcoiners opinion on this. I am not perfect please mention if I am lacking somewhere.