EVERYTHING
According to Bitcoinfoundation, Eli Ben-Sasson challenged the core premise of Bitcoin's scarcity model in a recent social media post. While Bitcoin is famous for its hard cap of 21 million coins, Ben-Sasson suggests that this fixed limit does not accurately reflect the amount of currency actually available for use in the economy.
The distinction between supply and circulation
Ben-Sasson highlighted a technical reality of the blockchain: when private keys are lost, those specific coins remain on the ledger but effectively vanish from active circulation. He argues that because these "lost" coins are permanently inaccessible, a hard cap on total supply is less meaningful than a controlled issuance policy. Instead of a permanent ceiling on the total number of coins ever created, he proposes establishing an absolute upper bound on future issuance.
To achieve this, Ben-Sasson suggested implementing a fixed maximum issuance rate. He proposed 4% per year as a potential benchmark, noting that it aligns with reasonable estimates for human population expansion. Such a move would fundamentally alter the current economic framework of the world's largest cryptocurrency by market cap.
Security and miner sustainability
The discussion also touched upon the looming challenges facing Bitcoin miners as block rewards continue to diminish through the halving process. The most recent halving in 2024 reduced the reward to 3.125 BTC per block. Ben-Sasson warned that shrinking rewards create a security risk, as the network will eventually need to rely almost entirely on transaction fees to compensate miners and maintain chain integrity.
The debate received a response from Zooko Wilcox, co-founder of Zcash, who presented an alternative model involving the burning and reintroduction of coins. While Ben-Sasson acknowledged the interest in such mechanisms, he remained firm on his primary thesis:
- A fixed inflation rate provides more predictable monetary policy than a hard supply cap.
- Current models do not account for "dead" coins that are lost by users.
- Transaction fees must become the primary driver of miner security as rewards dwindle.
Ultimately, Ben-Sasson maintains that capping the rate of inflation is a superior method for ensuring the long-term health and utility of decentralized assets compared to maintaining an arbitrary total supply limit.