[throwaway82652]

Except the extent of the taxing and borrowing is not constrained because you can just mint new cryptocurrencies. The world you're talking about is wholly imaginary. The only way this works is if you ban all other cryptocurrencies and enforce some kind of capital controls...

[tphyahoo2]

You can mint new fiat currencies. You can mint new cryptocurrencies. You can issue gold coins diluted with base metals.

But only one cryptocurrency can have the greatest proof of work. Unlike with counterfeit gold, this is easy and cheap to verify. And the cryptocurrency with the greatest proof of work is most secure (against 51% attack) from those who would seek to weaken, control, or destroy it. By its definition, proof of work crypto is a winner-take-almost-all market.

Capital controls are not necessary for a bitcoin dominated world.

[throwaway82652]

No, your comment is completely wrong in basically every aspect. The difficulty of proof of work (for the most part) only determines the profit margins of the miners and the volume of transactions on the network, and is also not set in stone and can be changed at any time. It's literally just another form of capital control. Also by dramatically increasing the difficulty you actually make the network much more susceptible to takeovers because that leads to consolidation amongst the miners.

[landemva]

>>> by dramatically increasing the difficulty you actually make the network much more susceptible to takeovers because that leads to consolidation amongst the miners.

I understand why gold got centralized into USA during WW2 (physical security, costly to assay). Why does increasing BTC difficulty lead to miner centralization?

[yifanl]

Mining difficulty roughly maps to a financial incentive for a miner to operate. As that line rises, the number of miners who can afford to mine in any significant amount would naturally decrease, right?

Unless there's some other angle to convince miners to continue mining unprofitably, which feels like defeats the whole purpose of a crypto-maximal economy to me.

[landemva]

Small miners typically join a pool to smooth the variance.

Also, hash rate and reward value don't always correlate - mining difficulty can increase during periods of flat or declining coin price.