Topic: Bitcoin Inflation or a way to increase number of Bitcoins (Read 2944 times)

This pretty much covers it.]

I'm not saying they care. I'm saying you are mixing up transaction fee and block reward.

You said:But the decrease over time (halving) of the block reward that occurs every 210,000 blocks has nothing to do with the number of transactions.

Besides, I don't know why the hell it would be necessary to "keep the reward for mining the same now and in 100 years"...?! It will always be profitable to mine for enough people. Because if not, some people will stop mining (especially the ones who pay more for electricity), difficulty will decrease, and by definition it will be cheaper to mine until it becomes profitable again.

Incorrect. Miners dont care where their profit comes from. whether its the actual block reward or transaction fees, it makes no difference so long as they get paid.

We will be find in the future. If we are still using money the way we do now in 2140, then we got much BIGGER problems. We better be closer to a Star Trek model by then. Bitcoin gets is the logical next step away from centralized currencies.

Read up on Bitcoin. I think you have mixed up 'transaction fee' and 'block reward'.

Within 100 years one of three things will have happened. Bitcoin will no longer exist in its current form, it will not exist at all or a government or multiple governments will control the system. If the liberals get their way and they can eventually use Bitcoin as an official government currency then the proof of work system will be performed by the government to ensure the continued operation of the national currency. They would be willing to do it at a loss so there is no worry.

if fee's become too low, the hundreds of thousands of miners would then move onto retail services or other things to make money. making the difficulty change and then leaving maybe 20k miners to take a bigger slice of the rewards pie with less competition so its profitable.

the whole idea that bitcoin needs millions of miners and everyone should be a miner is narrow minded, yes it is good for security but as more people join the mining pools they are just shooting themselves in the foot by not having as mucha big slice of the pie as they would without inviting 10 of their friends each to start mining.

basically, it will sort itself out in the end through natural selection. those that can afford to continue mining even in less profitable times will win, and those that demand profit promptly just to survive will move onto different income making projects.

On one hand, the system is specifically designed to make what you have in mind crazily difficult to happen, the supply of "Bitcoin" can only be increased when every current user(literally) agree to do so. Otoh, it's also ridiculously easy, you can go fork it right now and change the limit to whatever number you like.

This is Bitcoin.

Uh, no. The supply, at this moment, increases by roughly 3600 bitcoins per day. It was 7200 prior to the halving back in November 2012.

problem is though we have many digital currency systems that require transaction fees.
 
Try this: replace the term 'mining' with a better descriptor 'transaction processing' and some of the magic seems to wear off a bit doesn't it?

well, the idea is stupid. However what your talking about already kind-of exists. In the bitcoin software there is a second chain called the Testnet- everyone with a standard bitcoin client can access it. People mine it, and there are about 4.5 million coins mined. :-)

Just to throw this out there. Allot of people involved in bitcoin seem to fail to notice this one point.

(Examples with totally fake numbers, but youll get the point.)

There are two ways to keep the reward for mining(Edited for clarity) the same now and in 100 years.

if the reward for mining 1 block today is 1,000,000 USD, to keep it the same 100 years from now you can do 1 of two things.

1. Have 10 transaction with a fee of 100,000 USD equaling the 1,000,000 USD
2. Have 1,000,000 transactions with a fee of 1 USD equaling 1,000,000 USD

Allot of people seem to be under the false impression that the cost of transactions MUST go up in order to pay for mining. That is entirely not true, you need only increase the number of transactions as the block reward decreases over time(halves).

Youd need to increase the size of a block and youd need to implement pruning to get rid of dead weight from the blockchain. With time, internet speeds will get faster, memory will get cheaper and hard drives will get larger. you will see dedicated setups with vary fast internet connections to move blocks faster. Even on my internet connection i can move 1MB in less then a second. The problems many people see with this are in fact not problems. but things that will come in their own time as bitcoin grows.

I hope at least some of you get what im trying to say.

you sir are an idiot.
Doubling the amount of coins would halve their value and still give miners the same value when they mine, solving exactly squad!

It's so frustrating to see how people don't get the basic principle behind bitcoin, difficulty and transaction fees! Even after 46 posts on this forum.
It's a SELF REGULATING system. You don't have to solve any problems because there are NONE.
Miners will always get tax fee that is profitable for them. If they don't, they will stop mining and difficulty will decrease making it more profitable for the rest to mine -> incentivising mining.
At the same time people will up their transaction fee because if they don't their transactions will not be confirmed. -> making mining profitable.

You just can't knock the bit coin system of it's feet. If it gets a bump it will straighten itself out and find a new point of stability.
Educate yourself and stop coming up with problems that don't exist.

I agree with the above post. We are using mBTC, uBTC. That is effectively an increase the number of BTCs.

Well, yes, but not explicitly - what is hardcoded is the 50 BTC reward per block that is being halved every 210,000 blocks. The theoretical limit is therefore 210,000 × (50+25+12.5+6.25+... until infinity) = 21 million.

Nope. Currently, the Bitcoin software supports 8 decimals (i.e. up to one hundred millionth of a Bitcoin) but this precision can be easily increased. There is no fundamental reason or protocol limit why bitcoins couldn't be divided up to 50 decimals, for example.

So as long as the precision is being increased, the mining reward for each block will always become smaller, but never zero.

You seem to miss the fact that this balances itself out. Difficulty vs number of miners (and their combined computing power), you know.

The mining earnings (block reward + transaction fees) will by definition cover the power cost to keep miners running. If not, some miners will quit, difficulty will decrease, and it will become easier (thus cheaper in terms or power cost) for others to keep mining.

Completely unnecessary. But more importantly, you seem to think that it would make a fundamental difference if there are 21 million or 42 million bitcoins. The exact number doesn't matter, it's completely arbitrary! Bitcoins are digital, therefore divisible, and it doesn't make ANY difference whether there are 21 million, or 600 quadrillion, or just 3.14 bitcoins in total.

Conclusion:
1. No (it wouldn't make ANY difference whatsoever)
2. We shouldn't - well, eventually we can increase the precision to support more decimals, if the need ever arises, but not for now.

To the OP: if you don't like having a hard cap on the number of coins go get into PPC or one of its clones. I actually think they have a sound model too but the 21MM of BTC is the #1 inviolable thing and why it remains king of crypto. You might be tarred and feathered for suggesting otherwise

I don't think this is a problem.

Miners will continue to mine until it is near non profitable to do so.

The only way bitcoin's security will be compromised is if someone immediately appears with > 51% of the systems hashing power and thus can slowly undo transactions in the blockchain (i think) - but this involves significant costs.

And if the system is compromised, people will deem their btc as worthless and cash out/accept their losses, and that person who wishes to sabotage the network will be left with a lot of worthless currency.

It is not profitable to be dishonest, and mining will always approach nash equilibrium

The OP suggested increasing the amount of coins via the stock split principle, thus in reality nothing will change.

If 1 BTC = $100, then 0.5 BTC = $50, and there would be twice the number of bitcoins as prior to the split worth the same exact amount. In case I presented it incorrectly, the Market Cap will remain the same with with twice as many bitcoins in the wild worth exactly half as much at the moment of the split.

Hell, you can do a reverse split all the down to 1 BTC = The Current Market Cap.

That said, ideally a 10:1 split would be better, with each unit seemingly easier to obtain at ~$10 each (ain't got a clue as to what the current exchange rate is, hence the ~).

the point is that Bitcoin is said to be a 'free open money system', really it is not quite meeting these qualifications.

So if I send 20.00 of bitcoin from point X to point Y, it appears as though it is free- however the fee is embedded in this inflation function.  Eventually the price of BTC does not hold.

Consider this: Mining could be thought of as an investment vehicle. A 'rig' costs X dollars and generates 'Y' dollars.  As we generate an industry of mining hardware, and these investments become more tractable, then that means that it becomes available to larger capital pools.  The moment this happens then you also have mining monopolization which carries a host of system problems as well.

If an ASIC miner were indeed a great investment, why don't the ASIC manufacturers just start mining instead of selling the rigs themselves?

"the people who made the greatest gains in the Californian gold rush were the ones who sold the shovels."