In a recent Satoshi Roundtable meeting, bitcoin development ideas floated around, few of which found their way into social media. Of those, the inflated bitcoin supply cap received the most attention, spurring heated debate on the topic.
Those in favor argue that transaction fees would rely on the value of the coin, rather than volume. Those against it reference Satoshi’s original idea of the blockchain network, as well as issues that mainstream fiats currently face.
Due to the impending Bitcoin halving, it seems that the community is trying to find solutions for limited block sizes. An organization called Satoshi Roundtable just held a fifth online meeting with developers. The main aim of the gathering was to discuss various issues that the BTC network currently faces. Organized by Bruce Fenton, attendees discussed lightening network, bitcoin fees, block sizes, and even general bitcoin supply.
Although Lightening Network received most of the attention, participants also poked around the change on bitcoin supply. Matt Luongo, one of the attendants, even brought the debate on Twitter as well, asking for opinions. He is in favor of raising the bitcoin supply cap, pushing many to argue for and against the idea. Interestingly, the exact new volume cap is yet to be disconcerted.
Increasing Bitcoin Supply Over 21 Million
The current bitcoin supply in the crypto market stands at 21 million coins, with 17.5 million in circulation. Thus, developers are already designing plans on how to prolong the lifespan of block mining awards. Currently, although still far away, the mining operations would stop once all coins enter the market.
Two sides argue their causes regarding the new bitcoin supply cap through several vital points of interest. However, miners and network fees seem to be the main issue upon which different sides disagree. Additionally, the prolonged bear trend in the crypto market pushed developers to seek ideas on how to improve bitcoin’s network. The cryptocurrency seems to have quite an impact on the entire industry since its market power is quite large.
Hedging Against Supply Limitations
As soon as the news regarding new bitcoin supply cap came out, network fee questions surfaced. Luongo, commenting on the current situation, stated that miners' revenue would move from being inflation-based to transaction fee-based BTC operations. Due to the ever-shrinking block sizes, fees would inevitably grow as well. Thus, for those that mainly deal with small transfers, such development could cause issues.
“As the block reward shrinks, though, those tx fees have to grow larger to support the same accumulating security on chain. Bitcoin could be the ultimate settlement chain- only supporting large transactions, and moving all small transactions to layer 2.”
As a solution, he proposed several solutions that would solve the bitcoin supply problem. One is the curbing of the long-standing supply limit of BTC, pushing for periodic emissions into the network. Another solution regards the usage of BTC’s second layers that would “contribute back to chain security.” Both ideas might help prolong the supply, ease the pressure on miners, and solve scaling issues that bitcoin currently faces.
With a lot of interest in the debate, there also sides that cannot accept solutions regarding increased bitcoin supply cap. Many of the commentators blocked the idea from the get-go, citing that inflation could only hurt bitcoin's prospects. Additionally, crypto leaders expressed their views on various occasions regarding the inflated supply of bitcoin. Dan Held argued earlier that Bitcoin should be a Store of Value (Sov), not a currency for payments.
However, there are also those in favor of the change concerning the bitcoin supply limit. Peter Todd is one of them, though he advocates for long-term planning. Thus, any changes to the network should happen in a decade from now. The issue is that inflation might push the bitcoin into an even more volatile territory.
“While this is short term alarmist - we still have 2% inflation as of the next halving, which will likely be the millions/day - in the long run, it'll be a good argument. Maybe in another 10-15 years?”
Ari Paul, on the other hand, proposed a mid-ground argument, calling for a discussion on the bitcoin supply topic. He stated that there was “little discussion about possible hard forks," believing that bitcoin needs critical thought and healthy debate. Whatever the decision in the future may be, he argues that all options should be on the table, inflated supply included for BTC to grow.