No, miners don't pay transaction fees. They GET PAID the transaction fees from the transactions in the block they hash/verify.
My point is, when transaction fees are the ONLY incentive to mine (and that will happen eventually as a certainty) the total sum of the transaction fees must match the cost of mining the block they were included in. If the block costs more to mine than the value of the transaction fees in a block, miners (most) will shut down. At least so many will shut down that the network becomes insecure and Bitcoin will die.
Currently, at the existing transaction per block limit, that would mean that a fee of $1.5-$2 would have to be paid for EVERY transaction to be added to the blockchain. Alternatively, the functional or "real" value of BTC should be ten times higher to compete with an average alternative payment processor. That is of course if you look at BTC from a purely transactional and transfer point of view.
So, I'm looking for ideas as to what the ecosystem as a whole will see as a solution to this. Either Bitcoin finds mainstream adoption and the price increases to at least match the cost of mining or the blocksize will have to increase to accommodate more transactions with a lower fee. Perhaps a bit of both.
Either way, if either are to happen, Bitcoin will need to find mainstream adoption before the block reward becomes less than the cost of mining. I think I read that Satoshi said that Bitcoin would be everywhere or nowhere in 20 years and this might be what he meant. 20 years is 5 halvings of the reward. We're almost 2/5s of the way there.
Of course, I may be way off here, this is all hypothetical
My point is, when transaction fees are the ONLY incentive to mine (and that will happen eventually as a certainty) the total sum of the transaction fees must match the cost of mining the block they were included in. If the block costs more to mine than the value of the transaction fees in a block, miners (most) will shut down. At least so many will shut down that the network becomes insecure and Bitcoin will die.
Currently, at the existing transaction per block limit, that would mean that a fee of $1.5-$2 would have to be paid for EVERY transaction to be added to the blockchain. Alternatively, the functional or "real" value of BTC should be ten times higher to compete with an average alternative payment processor. That is of course if you look at BTC from a purely transactional and transfer point of view.
So, I'm looking for ideas as to what the ecosystem as a whole will see as a solution to this. Either Bitcoin finds mainstream adoption and the price increases to at least match the cost of mining or the blocksize will have to increase to accommodate more transactions with a lower fee. Perhaps a bit of both.
Either way, if either are to happen, Bitcoin will need to find mainstream adoption before the block reward becomes less than the cost of mining. I think I read that Satoshi said that Bitcoin would be everywhere or nowhere in 20 years and this might be what he meant. 20 years is 5 halvings of the reward. We're almost 2/5s of the way there.
Of course, I may be way off here, this is all hypothetical
Miners can't await that the fees make up for losses of reward halving. The fees simply would have to raise to a level that bitcoin would die from. So for now they have to deal with mining becoming less profitable. Which means switchign off old miners and only letting the good ones run.
At the end... these profits will rise again when the bitcoin adoption is rising, more transactions happen and so the miners will get more fees as a reward. But the total profit will proceed to drop for years now.
