Comment by Lerc
17 hours ago
The difference is that the quantity of what is being supplied is a factor with supply of oil/gold/grain/etc.
For mining it is just necessary that it happens.
The amount of work in mining is way higher than is required to prevent another party from being able to overwhelm the Blockchain. It is that high because of the subsidy of the mining reward means if Bitcoin has a high value the reward is worth a lot.
This is factored in with the halving of the reward. Either the price will increase exponentially or the mining reward will drop. Causing mining to reduce to those who can be profitable from fees. Which rewards those who can mine most efficiently, it becomes a supply and demand calculation in a market where there are relatively low barriers for competitors.
> The amount of work in mining is way higher than is required to prevent another party from being able to overwhelm the Blockchain.
Isn’t that exactly the point? Bitcoin incentivized wasting resources. It is, according to your own comment, unnecessary to use so much computing to keep bitcoin going. But it’s being used.
The level to be secure is much lower that.
If Bitcoin were worth much less the network would still be secure even though the mining reward would only be enough to pay for a fraction of the current processing.
If Bitcoin does not double in value every four years, the mining reward will reduce in real world terms.
Claiming the mining resources required will be at the current level or higher perpetually requires also making the claim that you think that the value will increase exponentially forever.
Nothing increases exponentially forever.