Topic: Can bitcoin sustain itself on fees alone? - page 3. (Read 688 times)
The last mineable block is far away and won't be a problem as bitcoin continues to develop. It will probably switch to POS at some point with other stake incentives added in the decades to come
Was that something that we should celebrate about, however? I reckon people who might want to use bitcoin regularly might instead choose to use an altcoin because they get the same results without paying for the high fees.
Also, escaping by saying that we are dead before it becomes a major problem is like already accepting that there is no fix to the problem.
Except you can't get the same results as Bitcoin by using any altcoin, no matter how good or bad it is. The differences are:
1. Alts are even more volatile than Bitcoin, so they are even harder to use as a currency.
2. Alts are less secure due to small number of developers and less talent among them. Also a lot of them have questionable network designs, which might make them inherently flawed.
3. Many of them are simply centralized or not protected enough in terms of consensus.
4. Very few merchants actually accept them. You'd have to go through an exchange a lot, which is an additional risk and fee burden.
5. Alts have high fees too when too much people use them, Ethereum had very annoying backlogs in the beginning of 2018.
Basically, alts are horrible for saving, even on a scale of months. It might make some sense to have a small altcoin wallet for "buying coffee", but if you include volatility and risks into calculation, using Bitcoin is cheaper than alts. And this is all while ignoring Lightning Netowrk, for the sake of argument.
that is a misleading chart because it is only showing bitcoin amount and calls that "income" but at the same time it is talking about "costs" in fiat terms. so basically it is comparing apples and oranges.
let me first quote satoshi who said (paraphrasing) "in the future there will be many transactions or none at all". basically if the adoption grows, the price grows and the price rise covers the block reward halvings and then some. if the adoption doesn't grow and people stop using bitcoin, price doesn't rise so there is no point in talking about security of something that is not used!
let me first quote satoshi who said (paraphrasing) "in the future there will be many transactions or none at all". basically if the adoption grows, the price grows and the price rise covers the block reward halvings and then some. if the adoption doesn't grow and people stop using bitcoin, price doesn't rise so there is no point in talking about security of something that is not used!
A BIS source is going to be as hopelessly fudtastic as Nouriel Roubini after his Yobit account's been hacked.
I remember Greg Maxwell celebrating the fact that a block's fees outweighed the block reward for the first time during the height of Bitmain's probable spamming. It certainly sucked for us but it did prove it was possible.
Luckily we'll be dead or in nappies before this becomes a major problem. I am curious to see how it's going to pan out. If I'd been designing BTC I would've kept an eternal tail emission but you're not allowed to say such things.
I remember Greg Maxwell celebrating the fact that a block's fees outweighed the block reward for the first time during the height of Bitmain's probable spamming. It certainly sucked for us but it did prove it was possible.
Luckily we'll be dead or in nappies before this becomes a major problem. I am curious to see how it's going to pan out. If I'd been designing BTC I would've kept an eternal tail emission but you're not allowed to say such things.
Was that something that we should celebrate about, however? I reckon people who might want to use bitcoin regularly might instead choose to use an altcoin because they get the same results without paying for the high fees.
Also, escaping by saying that we are dead before it becomes a major problem is like already accepting that there is no fix to the problem.
The idea is that by the next time a spam-apocalypse happens, either by an attack by Bitmain, real organic transactions, or a combination of both (which I think is what happened during the last bubble) second layer solutions will be user friendly and ready to use on every exchange, otherwise we will have the same outcome. Bitcoin will always have value no matter how high the fees go, but a % of buyers that cannot afford the fees would move to some alt if there isn't second layer solutions by then and I assume there will be since probably the next massive bubble to $100k+ will not happen until the 2020-2023. I expect all these stylish and user friendly LN wallets to be working everywhere by then so it shouldn't be a problem. All these guys that want to buy 50 bucks worth of BTC should be able to do it through that.
Nonetheless, none of the alts offer the security of Bitcoin with faster and cheaper transaction, it just means the alts would be less crowded so if people want to buy alts for a cheaper fee in exchange of less security then so be it, but ultimately none of them are real competition for Bitcoin.
I reckon people who might want to use bitcoin regularly might instead choose to use an altcoin because they get the same results without paying for the high fees.
It really depends on which altcoin survive and how's their development I believe. Regular folks won't use Monero, and importantly most people know about Bitcoin and it is relatively more adopted than other cryptocurrency. I can pay subscription using Bitcoin at this moment on file hosting site such as Mega, where IIRC they don't accept other cryptocurrency.
All of this experimentation in recent years is heading towards what the core developers have been mumbling about all along - all necessary scaling is looking increasingly like an impossibility on chain.
Yeah, I believe 2nd layer will be the solution to scale Bitcoin. On-chain transactions will only be used for something which requires a very high security just as Murad Mahmudov said. And when this time come, how much will 1 BTC worth anyway? If it's $1 million/BTC then 1k satoshi for fees is more than enough.
Was that something that we should celebrate about, however? I reckon people who might potentially want to use bitcoin regularly might instead choose to use an altcoin because they get the same results without paying for the high fees.
Also, escaping by saying that we are dead before it becomes a major problem is like already accepting that there is no fix to the problem.
Also, escaping by saying that we are dead before it becomes a major problem is like already accepting that there is no fix to the problem.
That's the luxury of being dead. All of one's problems are solved instantly and eternally.
All of this experimentation in recent years is heading towards what the core developers have been mumbling about all along - all necessary scaling is looking increasingly like an impossibility on chain.
There are two likely outcomes. Either something comes along that isn't BTC that does scale on chain which is more than possible though whether BTC is too entrenched by then is another matter, or it does the layer two thing.
If it is to be layer two then on chain transactions will be large and carefully planned which'll provide a much steadier fee situation than the current ad hoc spikes.
A BIS source is going to be as hopelessly fudtastic as Nouriel Roubini after his Yobit account's been hacked.
I remember Greg Maxwell celebrating the fact that a block's fees outweighed the block reward for the first time during the height of Bitmain's probable spamming. It certainly sucked for us but it did prove it was possible.
Luckily we'll be dead or in nappies before this becomes a major problem. I am curious to see how it's going to pan out. If I'd been designing BTC I would've kept an eternal tail emission but you're not allowed to say such things.
I remember Greg Maxwell celebrating the fact that a block's fees outweighed the block reward for the first time during the height of Bitmain's probable spamming. It certainly sucked for us but it did prove it was possible.
Luckily we'll be dead or in nappies before this becomes a major problem. I am curious to see how it's going to pan out. If I'd been designing BTC I would've kept an eternal tail emission but you're not allowed to say such things.
Was that something that we should celebrate about, however? I reckon people who might want to use bitcoin regularly might instead choose to use an altcoin because they get the same results without paying for the high fees.
Also, escaping by saying that we are dead before it becomes a major problem is like already accepting that there is no fix to the problem.
2. There are assumption more people will use Bitcoin in future which mean there will be more transaction and bitcoin price will rise which means miners should able to mine at profit
That's the most likely outcome, and we have all the real world evidence we need to know that it can work. I'm sure that in the coming few decades we will see that continue to happen with how adoption continuously picks up.Every previously higher block reward has a much, but really much lower USD value than the current 12.5BTC block reward is worth in USD. A 50% deduction in block reward from here is compensated with a simple 100% price increase.
$8000 BTC is nothing in the grand scheme of things, and with time we'll turn the $20,000 peak into one of our future bottoms. Just let Bitcoin be Bitcoin and it'll work out just fine, people don't need to worry.
people DO NOT need to pay high fee's to make bitcoin mining functional. here is why
1. having an increased transaction count per block can offset this.
EG 2000 tx of 25cents doesn't mean 2000 tx of 50cents after a halving. instead 4000 tx of 25cents offers the same solution
this is not a point where the usual snake charmers shout out "gigabytes by midnight" or "blockchains cant scale".
reality is they can scale. and it doesnt need to be jumping extra large real fast. but progressively over time
2. the 1.2fee:12.5reward wont 'flip' for a few decades. so shouting out we need fee wars now are empty argument
3. changing the mining algo to be less 'costly' to mine can provide solutions too
4. just because difficulty has gone up. doesn't mean it has to continue go up. difficulty can plateau,
so COSTS may not increase continually thus not need to increase the fee
5. though the reward halves. the price of reward deflates(goes up) meaning 12.5btc today is worth more than 25btc pre 2016.
so tx fee's are not essential replacement, because the btc price deflation is the replacement
6. if pools cant make profit. they wont mine as strongly. its not like they are forced to work.
they can give up. leaving and letting the remainers have a larger slice of the pie to offset.
EG if 100k asics was getting $50k per block($0.50 each) but were not making profit. then say half stopped.
now 50k asics are getting $50k ($1 each)
1. having an increased transaction count per block can offset this.
EG 2000 tx of 25cents doesn't mean 2000 tx of 50cents after a halving. instead 4000 tx of 25cents offers the same solution
this is not a point where the usual snake charmers shout out "gigabytes by midnight" or "blockchains cant scale".
reality is they can scale. and it doesnt need to be jumping extra large real fast. but progressively over time
2. the 1.2fee:12.5reward wont 'flip' for a few decades. so shouting out we need fee wars now are empty argument
3. changing the mining algo to be less 'costly' to mine can provide solutions too
4. just because difficulty has gone up. doesn't mean it has to continue go up. difficulty can plateau,
so COSTS may not increase continually thus not need to increase the fee
5. though the reward halves. the price of reward deflates(goes up) meaning 12.5btc today is worth more than 25btc pre 2016.
so tx fee's are not essential replacement, because the btc price deflation is the replacement
6. if pools cant make profit. they wont mine as strongly. its not like they are forced to work.
they can give up. leaving and letting the remainers have a larger slice of the pie to offset.
EG if 100k asics was getting $50k per block($0.50 each) but were not making profit. then say half stopped.
now 50k asics are getting $50k ($1 each)
Bitcoin is the main protocol, there rest that will be built on top of it will be generating fees too, so it's not just on-chain fees that miners will be getting, but also the fees coming from side chains they merge mine, second layer fees (i.e. providing liquidity to LN, and remember that LN is just one second layer and that we will have many more), etc. We're not even close to a point at which we have seen what Bitcoin and everything running on top of it is truly capable of.
As long as people have an incentive to pay high fees, they will continue doing so. Speculation and both use as value transfer are pretty damn solid sources of incentives.
As long as people have an incentive to pay high fees, they will continue doing so. Speculation and both use as value transfer are pretty damn solid sources of incentives.
A BIS source is going to be as hopelessly fudtastic as Nouriel Roubini after his Yobit account's been hacked.
I remember Greg Maxwell celebrating the fact that a block's fees outweighed the block reward for the first time during the height of Bitmain's probable spamming. It certainly sucked for us but it did prove it was possible.
Yeah, if Bitcoin will keep being popular, the fees should be enough to sustain the PoW. Also, we don't know how much Hashpower we need to feel safe, generally it is the more the better, but there should be some diminishing returns. We're still to far from that moment to make any good predictions.
Luckily we'll be dead or in nappies before this becomes a major problem. I am curious to see how it's going to pan out. If I'd been designing BTC I would've kept an eternal tail emission but you're not allowed to say such things.
Many members of Bitcoin community think that any regulations = communism and any inflation = Venezuela/Zimbabwe. Even if it will be scientifically proven that emission is needed to subsidize the PoW, people would still be opposing it.
Is Raphael Auer's paper fact or fud?
It will be a fact if bitcoin today will the bitcoin until the last coins were minted. I think the developers know that, but it's way too early to be bothered with it, there are more important things to be done first. But some FUDs came from facts anyways, but were only solved that's why they became a fud afterwards.Luckily we'll be dead or in nappies before this becomes a major problem.
Quite right. Let the people living on that time solve that and let us, the early bitcoin users, rest in peace. 
A BIS source is going to be as hopelessly fudtastic as Nouriel Roubini after his Yobit account's been hacked.
I remember Greg Maxwell celebrating the fact that a block's fees outweighed the block reward for the first time during the height of Bitmain's probable spamming. It certainly sucked for us but it did prove it was possible.
Luckily we'll be dead or in nappies before this becomes a major problem. I am curious to see how it's going to pan out. If I'd been designing BTC I would've kept an eternal tail emission but you're not allowed to say such things.
I remember Greg Maxwell celebrating the fact that a block's fees outweighed the block reward for the first time during the height of Bitmain's probable spamming. It certainly sucked for us but it did prove it was possible.
Luckily we'll be dead or in nappies before this becomes a major problem. I am curious to see how it's going to pan out. If I'd been designing BTC I would've kept an eternal tail emission but you're not allowed to say such things.
First read the paper linked at the bottom.
Is Raphael Auer's paper fact or fud?
However, will the fees continue to sustain bitcoin's security forever, after all the coins are mined?
Also, we are in the early days of cryptoecnomics. There are developers that are experimenting to create a fix for the possible lack of mining incentives when all coins are mined by implementing a tail emission. There are other altcoins taking an inflationary approach with a transparent emission.
Raphael Auer, Principal Economist of Monetary and Economic Department at the Bank for International Settlements (BIS), wrote a paper titled “Beyond the doomsday economics of “proof-of-work” in cryptocurrencies.”
The paper starts with showing how the popularity of Bitcoin and other cryptocurrencies soared in late 2017, outstripping interest in sovereign currencies, or even gold. But yet Auer points out that according to research by Chainalysis, few people were actually using Bitcoin to buy things.
The paper defines ‘economic payment finality’ when it is unprofitable for any potential adversary to undo it with a double-spend attack. Auer argues that double-spending is very profitable and that attackers stand to gain a much higher bitcoin income than an honest miner because they collect the double-spent amount on top of transaction fees and block rewards. The paper states that “proof-of-work can only achieve payment security if mining income is high, but the transaction market cannot generate an adequate level of income.”
Auer argues that because the block rewards are decreasing with time, the security of payments decreases and transaction fees become more important to guarantee finality. He says that “the economic design of the transaction market fails to generate high enough fees.” Auer continues with saying that users are free-riding on the security provided by the transaction fees of other transactions in the chain, which causes the transaction market to be unable to generate an adequate level of mining income.
The proof-of-work and hence the level of security is determined at the level of the block in which a transaction is included, whereas the transaction fee is set by each user privately. Auer says that the key result is that the fee set on a decentralized basis is much lower than the optimal fee, which results in long times before finality is reached.
Auer concludes that Bitcoin’s liquidity will fall substantially in the long run in the absence of relevant technological advances. The block rewards represent the vast majority of miners’ income and thus underpin the security of payments. But since the block rewards are being gradually phased out, the paper argues that the security of payments is also set to deteriorate.
Read in full https://www.theblockcrypto.com/2019/01/22/bank-for-international-settlements-argues-bitcoin-is-not-sustainable-without-block-rewards/
Link to Raphael Auer's paper https://www.bis.org/publ/work765.pdf
Is Raphael Auer's paper fact or fud?
However, will the fees continue to sustain bitcoin's security forever, after all the coins are mined?
Also, we are in the early days of cryptoecnomics. There are developers that are experimenting to create a fix for the possible lack of mining incentives when all coins are mined by implementing a tail emission. There are other altcoins taking an inflationary approach with a transparent emission.
Raphael Auer, Principal Economist of Monetary and Economic Department at the Bank for International Settlements (BIS), wrote a paper titled “Beyond the doomsday economics of “proof-of-work” in cryptocurrencies.”
The paper starts with showing how the popularity of Bitcoin and other cryptocurrencies soared in late 2017, outstripping interest in sovereign currencies, or even gold. But yet Auer points out that according to research by Chainalysis, few people were actually using Bitcoin to buy things.
The paper defines ‘economic payment finality’ when it is unprofitable for any potential adversary to undo it with a double-spend attack. Auer argues that double-spending is very profitable and that attackers stand to gain a much higher bitcoin income than an honest miner because they collect the double-spent amount on top of transaction fees and block rewards. The paper states that “proof-of-work can only achieve payment security if mining income is high, but the transaction market cannot generate an adequate level of income.”
Auer argues that because the block rewards are decreasing with time, the security of payments decreases and transaction fees become more important to guarantee finality. He says that “the economic design of the transaction market fails to generate high enough fees.” Auer continues with saying that users are free-riding on the security provided by the transaction fees of other transactions in the chain, which causes the transaction market to be unable to generate an adequate level of mining income.
The proof-of-work and hence the level of security is determined at the level of the block in which a transaction is included, whereas the transaction fee is set by each user privately. Auer says that the key result is that the fee set on a decentralized basis is much lower than the optimal fee, which results in long times before finality is reached.
Auer concludes that Bitcoin’s liquidity will fall substantially in the long run in the absence of relevant technological advances. The block rewards represent the vast majority of miners’ income and thus underpin the security of payments. But since the block rewards are being gradually phased out, the paper argues that the security of payments is also set to deteriorate.
Read in full https://www.theblockcrypto.com/2019/01/22/bank-for-international-settlements-argues-bitcoin-is-not-sustainable-without-block-rewards/
Link to Raphael Auer's paper https://www.bis.org/publ/work765.pdf
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