Topic: bitcoin mining without the coinbase block reward - page 2. (Read 249 times)

Im not sure but I believe this is a good question. back then bitcoins market cap was probably only a few million so making an attack wouldn't be worth the effort. but now the market cap is 2 trillion, which is probably a million times higher which means the hashrate would need to be a million times higher to have the same security to value ratio as 10 years ago.

So security of the network should be proportional to the total value of it or the total market cap of bitcoin.

Also I think It would be better to look at the energy consumption of the mining network instead of the total hashrate because the hashrate increases from more miners and improvements to mining hardware. So looking at energy consumption cancels out the hardware improvement factor and would give a better estimate of difficultly to pull off a 51% attack.

If energy consumption of the network remained the same hashrate would still go up giving an illusion of increased network security.

Bitcoin network security is from total hash rate and decentralization of hash rate. Lower hash rate, higher risk of 51% attacks. Less decentralization, higher risk of 51% attack.

Your thinking is wrong as you can see Bitcoin network hash rate does not go upward with a straight line but it has rises and decreases with time. Bitcoin transaction fee goes to miners each block increases or decreases too, it comes from demands of Bitcoin users and hypes on this blockchain.

Latest hypes are from Ordinals, BRC20 tokens and Bitcoin miners got a lot of bitcoins in transaction fees, it's their extra profit in 2023. Recent months, the hype cools down but do you see any worse security on Bitcoin network, to prove your thinking is right?

Inscriptions, Mempools and Miners

The real question is how much security we need? Bitcoin was less secure 10 years ago when hashrate was a fraction of what it is now, yet it didn't get attacked. It could be true that transaction fee rewards are sufficient to secure the network.

Also, there's another variable that almost everyone overlooks. Number of confirmations. If the network is more likely to get 51% attacked, then those who who accept transaction can just require higher number of confirmations. Today we used to treat 1 confirmations or 3 confirmations as secure, in the future it might be 10 or 20. No one is going to pay for coffee with on-chain BTC anyway.

These concerns have  been the talk of the community for a long time now but we are still talking about hypothetical scenarios. So, let’s also consider hypothetical solutions.

We are hoping to see some technological advancement in the next couple of hears through the lightning network that could reduce the pressure from the main chain. This would benefit us investors as well and could maybe lead to us using bitcoin as a payment method.

Another hypothetical solution is if miners were to be enticed by a different kind of reward mechanism this time. Maybe there would be some protocol change that could incentivize miners.

This question always comes up during halving period and the answer is always let’s wait till then. Many have worried in the past that at a reduction like this it wouldn’t be profitable but still we have miners. What will happen is miners who finds out that the process isn’t beneficial or profitable to them again will definitely quit, should it be large computational power that comes down then the difficulty target also reduces thereby inviting more miners too again.

As for the concern of whether the network will be decentralized I think yes the only concern will be if the mining nodes each decide to censor transactions they pick but maybe a node will try to harm the network carry out an illegal transaction? It will not happen because there would still be need for consensus

Space in blocks is limited you can't have twice as many transactions every time the rewards halves unless you increase the blocksize!
So, you either increase the blocksize each time by two and somehow force people to fill it up or you acknowledge that the maximum security the network can get will also come down by half each for years when expressed in the amount of $ it takes to attack it.


Some, for the rest...


And that's the math for 6cents/kwh, raise it to 10 cents and you will need free gear!

It's a well-known problem and there's no good solution as far as I know.
And it gets worse with solutions like the Lightning Network, which are helpful indeed in terms of sending txs at a very low fee, but (if successful) they would reduce demand for on-chain transactions.
Having a permanent bottleneck is also not a fix to the problem, as it would mean that sending bitcoins on-chain is unreliable as you wouldn't have guarantee that your tx will get confirmed in a timely manner even if the fee is high.
I believe the original idea was that there were meant to be many transactions with affordable fees, but that concept didn't quite account for the blockchain size issues.

Anyhow, I wouldn't worry about that too much as we still have a lot of time to sort that out. In a worst case scenario, we could change the algorithm, or hope that bitcoin related businesses will take on mining on themselves, as they have vested interest in keeping the network alive.

TBH, I don't think mining alone is a profitable business, but if you are farming with others then profit will still be made. Miners are already making good profits. Let's break it down a little, they make a profit from block reward which currently is 6.25 right? After halving they will make 3.125. Considering the inflation rate, and other devaluation of fiat and BTC price. We can deduce miners are going to make a lose.

But I don't think they only have to depend on Blockreward or fee reward, they can make an equal amount of money if the adoption is doubled. If 2x people will start to use the BTC network, then there will be more tx in blocks waiting for to get processed. More miners will be in the network. Plus the price of one BTC is going to increase as well, if 2x people will adopt BTC than now. An increment in the BTC price and an increment in the adoption rate will still give them healthy rewards. Plus BRC-20 and ordinals are still functional, and according to some miners and CEOs of bitcoin.org miners are not in favor of stopping ordinal's functioning.

This wall of  text is terrible to read. Learn to break lines please.

You can't predict what the price of bitcoin will be next month, how can you predict 50 years? 100 years?

You can't know how much miners will receive when fee is the only reward. Probably, it will be enough. Miners are making a lot of money now, there is nothing to worry about them for now.

In theory as the bitcoin block reward keeps dropping transaction fees would take the place as payment to miners but If the fees don't increase miners would not be profitable and the hashrate would drop drastically.

The fees from transactions pay for the miners so more fees equals more miners therefore the network security is directly proportional to transaction fees. So in theory having a bottleneck on the network via the block size/block rate creates competition for block space and increasing fees which also increases security. If this bottleneck is not sufficient, fees will be low and based on the current fee rate once the coinbase is gone the hashrate will drop to 1-5% of its current hash rate. granted by that time I'm sure competition for block space will increase but fees might still be so low that the hashrate will be a fraction of the current day. For the hashrate to remain the same without the coinbase block reward, transaction fees would have to be ~650 sats/vB.

If for example transaction fees remained ~25 sats/vB in the future and bitcoin is 250k USD then there would be an average block reward from fees of 62k USD which would require 9mil USD a day to take over the network. If fees do get up to 650 sats/vB it would cost 234mil USD a day. 65mil USD a day is required to do the same thing in current day.

My concern is if the fee rate doesn't eventually replace the coinbase then the network will become less secure. What would be the solution if fees don't increase? Should we reduce the block size/block rate? or flatline the coinbase at some point so there will always be a small amount for miners to gain?