Bitcoin Suisse Fee Follows Function: Bitcoin security budget and zk rollups
Thread415 words
Summarizes the Bitcoin Suisse report on Bitcoin's long-term security budget. Fees must replace block rewards, Ordinals and BRC20 showed fee demand near block rewards, and a zk rollup could add use cases and a cash-flow multiple.
Key claims
Ordinals and BRC20 pushed tx fees almost equal to current block rewards
A zk rollup on Bitcoin could bolster the long-term security budget
Rollups would require significant changes to Bitcoin's codebase
0/ I read the report "Fee Follows Function" by @BitcoinSuisseAG so you don't have to 📚🔍
find a link to the report & a summary of the key takeaways below 📊 👇
🧵 (0/12)
1/ the report provides a deep dive into #Bitcoin's fees & security, #Ordinals, and #BRC20 ✨
find the key takeaways of this insightful exploration of $BTC's transactional infrastructure, the #L2 landscape, and #zk rollups below 👇
2/ 📊 Let's start with $BTC's current security model. As we know, #Bitcoin's model is time-bound, facing an uncertain future. The challenge arises when the last $BTC is mined, shifting the miner's compensation to tx fees only, posing potential threats to #Bitcoin's security
3/ for more on the $BTC fee issue, check my thread below 👇
x.com/expctchaos/status/1485683584145018884
4/ 💰 From #Bitcoin's inception, transaction fees were intended to replace decreasing block rewards with each halving. Unfortunately, these transaction fees have not contributed a substantial share so far, triggering concerns about $BTC's long-term security
5/ 🚫 While tail emissions aren't seen as an effective solution, #Bitcoin-holding entities might step in to secure their assets, similar to the storage expenditures associated with gold. However, the most promising solution is leveraging sufficient transaction fees
6/ 🛠️ #Ethereum provides an example of how increased functionality can generate substantial transaction fees, offering a potential pathway for #Bitcoin's security
7/ 🔥 #Ordinals and #BRC20s have ignited considerable hype, demonstrating how extended functionality can drive blockspace demand. This results in transaction fees almost equal to current block rewards, even if their popularity may be short-lived
8/ ⚡ While there are various #L2 solutions available, rollups particularly stand out due to their unique benefits. However, their implementation would require significant changes to #Bitcoin's codebase, challenging Bitcoin's goal of maintaining a minimalistic architecture
9/ 🔮 Implementing a #zk rollup on #Bitcoin could act as a significant catalyst for bolstering Bitcoin’s long-term security budget. This could lead to a new investment paradigm where Bitcoin accrues value through additional use cases on top of its monetary premium
10/ 🔄 Depending on the implementation, a #zk rollup could also alter Bitcoin's cash flow multiple, enabling #Bitcoin to be modeled like a unique, hybrid equity-like asset with a significant monetary premium
11/ 💡 In conclusion, #Bitcoin's path forward will likely involve a careful balancing act of maintaining network security, adapting its economic model & potentially integrating new technologies like #zk rollups. The road ahead is filled with potential opportunities & challenges
12/ check out the report here 📊👇
bit.ly/FeesFollowFunction
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What came next · since 04 Jul 2023
Show how the covered asset moved
This breakdown analyzes the project without making a call on the token, so price moves since publication are shown as market context.
Covered, no call
Since then
Zero has written 13 more pieces on $BTC since this one.
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- Bitcoin as regime change insurance, not a debasement hedgeCovers $BTC
Daily closes in USD from DefiLlama and Yahoo Finance. Only a bullish or bearish call in a thesis or market take is tracked; explainers, lists, maps and mentions are neutral context. Not financial advice.