Topic: How is the amount of BitCoin limited if people mine them everyday? (Read 1482 times)

When you send Bitcoins, there is some fee you have to pay, mostly 0.0005 BTC per transaction

Those are included in the transactions:
https://en.bitcoin.it/wiki/Transaction_fees

Thanks everyone,but where does the fees that the miners get come from?

The annual average inflation rate is above 10% at the moment (approximately 11.0728% at the moment), but it is continuously shrinking and the percentage is a bit smaller with every new block (approximately 11.0260% two weeks from now).  The inflation rate slowly shrinks to 0 over time, and eventually becomes negative (deflationary supply) when the quantity of bitcoins permanently lost within a period of time exceeds the quantity of bitcoins created during that same period of time.

Mining actually pays out a bit more than that, closer to 3625, due to transaction fees. Also, that's an average during times when the total hashing power in the network isn't increasing.  During those times of constant hash power, there will be some days that are a bit higher, and some that are a bit lower.

In times of increasing total network hash power, the number is more likely to be higher than that.  In times of decreasing total network hash power, the number is more likely to be lower than that.
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Not exactly, but approximately.  First it depends on if they are mining in a pool or not.  If they are, then the portion of the daily bitcoins that they receive depends on the rules of the mining pool they've chosen to work with as well as how lucky the pool is (how many blocks they manage to mine in a day).  If they are solo-mining, then it is possible for them to have lucky days where they solve more blocks than their percentage of the total hash power indicates.  It is also possible for them to have unlucky days where they solve less blocks than their percentage of the total hash power indicates.  Over a long period of time this variation will balance out and trend towards their average daily revenue being approximately equivalent to the their contribution to solving the blocks.

yes, bitcoin will be worth a lot then

It is, above 10% per year, but in a predicted way. I know today there wont be more than 21 million BTC ever

I wonder if the supply/demand will still apply at this stage.

At the moment, I think the supply is inflating about 0.92% per month.

theres a guide for newbies on this forum to understand blocks and difficulty.

A lot of people think that because of the cap, and therefore that bitcoin has deflationary properties, that it is deflationary currently. However, the bitcoin money supply is actually inflating quite fast.....

The block subsidy is cut in half (and truncated down to the nearest satoshi) every 210000 blocks (approximately every 4 years).  Eventually (in about 127 years) the block subsidy will drop to 0 and no NEW bitcoins will be mined.  The miners (or mining pools) also receive all the transaction fees paid by all the transactions that are confirmed in the block that they mine.  As bitcoin gains popularity, it is likely that the value of the transaction fees will increase even as the block subsidy is decreasing.  Eventually the block reward will consist entirely of transaction fees.


It is guaranteed, and built into the design of the system.  Approximately 127 years from now, the cap will be reached.


"Miners" continue to do the same work they are doing now, and they continue to be paid for that work.  They just get their income from the transaction fees instead of from the sum of transaction fees and block subsidy.  Perhaps once the transaction fees are larger than the subsidy we'll stop calling it "mining" and start calling it "transaction processing", but the actual work being done will be the exactly the same.


The block subsidy is 25 BTC, but keep in mind that there are transaction fees as well.  Therefore each block is actually "worth" a bit more than 25 BTC, although only 25 of those are newly minted out of nothingness.


In approximately 15 years the block subsidy will be 1.5625 BTC.  I suppose the total transaction fees per block could be consistently higher than 1.5625 BTC per block by then.  At the moment, I think they average a bit less than 0.25 BTC per block.


It will happen EXACTLY with block number 6,930,000.  It is difficult to predict just how quickly or slowly blocks will be created in the future, although it will continue to average somewhere around 2016 blocks every 14 days.  If is averaged EXACTLY 2016 blocks every 14 days, then we would hit the limit in late 2140.  It will probably actually happen sometime within a few years of that.


Miners gather unconfirmed transactions into a "block" of data.  They then build a "block header" from that data.  They then repeatedly perform a mathematical formula called SHA-256 against that header while slightly modifying a piece of data in the header called a "nonce" until they find a hash that has a value lower than the current target.  When people send transactions they can pay a transaction fee as part of the transaction.  The miner (or mining pool) receives the total of all the transaction fees of all the transactions that they include in the block they "solve".


The only way this could be changed is if you can convince EVERY SINGLE USER that is running a full node (such as Bitcoin-Qt) to switch to new software that has a modified block subsidy schedule.  If even 1 user and 1 miner (and they can be the same person) continue to run software with the current block subsidy schedule, then bitcoin continues to exist with the exact same rules it has today.


For the 4 years before the subsidy is 0 BTC, it will be 0.00000001 BTC.  For the four years before that it will only be 0.00000002 BTC.  The transaction fees are already larger than that.  Total transaction fees has more to do with the number of transactions being sent than with what the value of the subsidy is.


Closer to 2140, but the date isn't exact.


As more people shut down their miners, the difficulty drops.  Lower difficulty means a higher chance of receiving more bitcoins from mining. Eventually the value of the bitcoins received from mining is higher than the costs of mining.  At that point mining is once again profitable and the remaining miners leave their systems running.  It really depends on the value of the bitcoin.  In 20 years the block subsidy will be 0.78125 BTC.  If we assume for now that the transaction fees will still be approximately 0.25 BTC, then successfully mining a block will result in about 1.03125 BTC.  If you are the only one still mining, this means you get 148.5 BTC per day.  If you have 1% of all the mining power in the bitcoin network, you'll earn about 1.485 BTC per day.  If bitcoin is worth $0.01 per bitcoin, you'll probably shut your miner off if it's only earning $0.01485 per day.  On the other hand, if bitcoin is worth $10,000 per bitcoin, then 1.485 BTC per day will be earning you the equivalent of $14,850 per day.  I think I'd keep my miner running under that condition.

Who knows, maybe in 20 years price of Bitcoin will be so high it will still be profitable to mine for a lot of miners like today, Bitcoin is experimental cryptocurrency afterall 

If people shut down their miners, the other miners will receive more.
Somewhere a balance has to be found found between miner fees, number of transactions per block and computing power working for the network.
In the future the block size that limits the number of transactions per block probably has to be increased, so that fees don't increase too much for single transactions.

But in 20 years time the payout will be so little that everyone might just shut down their miners...

Yes and no, people can choose what fee they include and miners can choose what transactions they include.
As long as there is some competition going on (between the miners or between other payment systems), it should keep the fees low.

All Bitcoins will be mined around 2120, so dont worry, in our lifetime we will still have something to mine

In the end miners will only receive transaction fees. So they could increase when we hit that limit.

Approximately in over 100 years, but the rewards will become smaller and smaller so it will be just some satoshis in the last years.
In about 3 years the reward will drop from 25 Bitcoins to 12.5 Bitcoins.
When you do a transaction you can (and in some clients must) pay a small transaction fee, this also goes to the miners.

It's coded into the client version, so as long as people are running the same client if the network detects that it's reached the maximum amount of coins available. You've seen how MMORPG levelling works right? It's the same sort of thing, once the server reaches the maximum level then the players can't progress anymore. The only way this could be changed is if the whole thing was poorly coded or hacked from the outside, many people seem to have been impressed with the work though so we'll just have to see once the limit is hit, that's as far as my understanding goes though.