Is It Time To Begin Talking Seriously About Bitcoin Tail Emissions?
It’s almost a truism that Bitcoin (BTC)’s major selling point is its hard supply cap, limiting its total possible circulation to BTC 21 million. However, contrary to this received wisdom, there seems to be a growing chorus of people who worry that a hard cap isn’t without its problems, and that Bitcoin will run into difficulties when its block rewards become too small (and later stop completely).
A recent surge in discussion about this issue was incited by developer Peter Todd, who in July published a paper titled, “Surprisingly, Tail Emission Is Not Inflationary.” Basically, Todd noted that “no proof-of-work (PoW) currency has ever operated solely on transaction fees,” and that the lack of rewards may make block production unstable in the future.
Given how well respected Peter Todd is within cryptocurrency circles, many other serious commentators have taken his arguments as the launchpad for an exploration of whether Bitcoin’s monetary policy needs to be modified in the not-too-distant future. And there does seem to be support for the introduction of so-called tail emissions, even if this support isn’t unanimous.
It’s not too hard to find industry figures who’d support the introduction of tail emissions, which in practice means that block rewards would continue indefinitely. In other words, Bitcoin’s famed hard cap of 21 million would effectively be abolished, although it’s likely that any perpetual reward would be small.
“I have been very vocal for two years already, about needing tail emissions at some point in time in Bitcoin. These tail emissions will only be necessary after four or five halvings, so in about 15-20 years,” says Dr. Julian Hosp, the CEO and founder of Cake DeFi.
Hosp argues that most Bitcoin hardliners
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