Topic: Is there any chance the fee will rise to replace block subsidy? (Read 5677 times)

Any investment involves risk, there are so many technical and political uncertainty in bitcoin. But I think by now most of the agile investors already hold bitcoin

Theoretically, bitcoin is destined to double in value every 4 years due to lower and lower new coin supply each year. And if you consider the fact that fiat money just get more and more, and user base is going to grow, this performance is guaranteed

If the value doubles every 4 years, and block subsidy cut by half every 4 years, the fiat income for miners will not change. However, due to newer and newer mining technology, the difficulty raise caused by mining competition will dwarf the effect of reward halving (reward having have the same effect as difficulty doubling, which can happen in a couple of months when a new generation of chips come on line). And we all know that difficulty increase does not impact the fee, but raise the coin value

Fully agree with you.

ok lets give this question another bash

current fee=0.0001
1mb block = potentially 4000 tx a block =0.4tx fee total bonus potential (ftbp)

in 2016 bitcoin reward will 12.5btc and block limit will be 2mb (0.8tx ftbp)
the fee will decrease to 0.00001000 because bitcoin price hits $1000 and it needs to bring the fee down to roughly 1cent+ not 10cent+
4 years later 6.25block reward and block limit 8mb (0.32tx ftbp) - note it would be 3.2btc if tx fee stayed at 0.00010000
4 years later 3.125block reward and block limit of 16mb(0.64tx ftbp)
4 years later 1.5625block reward and block limit of 32mb (1.28tx ftbp)
4 years later 0.78125block reward and block limit of 32mb (1.28tx ftbp)
4 years later 0.390625block reward and block limit of 32mb (1.28tx ftbp)

so in 2028 the transaction fee potential will be nearly on par with reward, whilst allowing for progressive block size limit rising in previous years to a max of 32mb and keeping tx fee below 10cents (presuming bitcoin is below $10,000 to not require going down to 0.00000100)

in 2032 the transaction fee becomes more important than the block reward.

right now transaction fee's should not even be necessary as a payoff.. but more so to get people used to the fact that transactions cost a few cents.. that way by paying a few cents.. there wont be any shocks as its a standard practice.

there is NO REASON to raise the fee to cost more than 10cents.. EVER!!.. and it should not be an argument we have to have.. the only time tx fee's become important is well over a decades time. so not something to worry about now

So many people think bitcoin is magically going to double in price because of the halving. If this were true, why is every investor in the world not all-in on it?

Of course. I think the fee will rise straight after the halving, but after bitcoin doubles in price, then the fees will return to their current standard.

Doesn't work in my case. Where I live is right by a major Internet backbone so regardless of where I'm connecting to, I always have extremely low pings (as in sub-32ms EU/Asia, sub-16ms in the west).

Just a comment on current banking. I can transfer sterling to any UK bank account virtually instantly, and I can do that via a mobile or over MacD WiFi, and there are 4 levels of security for the transaction. There is no fee for this transfer. However with the arrival of NIRP there will be a charge for keeping fiat currency with a bank. This is not to knock Bitcoin. There are massive advantages in using Bitcoin as most members are aware. At the moment, I relish the thought of having a choice, and also in being able to move away from fiat currencies. I make this post because I believe that competitive pressures will keep charges low. My free bank transfers are probably the result of the arrival of Bitcoin for example.

Thanks, take your number instead

Far from attacking your argument, I just want to share a little-known fact:

• Under normal conditions, the probability than the next block arrives in less than 10 minutes is about 63%.

Try to open a couple of chinese website like youku.com or tudou.com you will understand what I mean

This is an interesting claim, but my understanding was that mining takes long enough that the latency isn't an issue (the chance of two mining blocks at the exact same second are almost non-existent). I personally have a sub-50ms ping to EU/Asia.

You can not have better connectivity since you already have the best available, the bottleneck is on intercontinental internet backbone. In fact the speed between Chinese miners inside china is very fast, so the rest of the world is struggling catching up with their blocks since the connection into and out of china is miserable and they have the largest hash power

Well, you could pay for better connectivity. If not, someone else will, and will enjoy the fee's from 10000 transactions. This situation is just a miner being priced out, which happens for other reasons already.

It will go up in 2016 due to a separate thing: fear in the markets. Fiat is crashing and economies are plummeting. Bitcoin is a route of safety. But again, that has absolutely nothing to do with halving.

Even if there is no block space limitation in software, the bandwidth limit would still limit the amount of transactions that can be included in a block

For example, if I include only 100 transactions, I can include all of them for free since they don't add too much latency. But if I include 10000 transactions then my block will be orphaned all the time. So if all the miners will mine small blocks which only include 100 transactions, the transaction fee can be at 0 forever. Then you will have more and more transactions piled up in the mempool, and some of them would like to add some more fee to incentivize miners to include them

So when the fee rise to 0.03 btc per transaction,  a miner would possibly include 8000 transactions and have only 1 out of 10 mined blocks entering the blockchain (rest all being orphaned), since if he succeeded the mined block will bring him 265 bitcoins in one single block

But there is a risk, if his block get orphaned almost all the time, then all those 8000 transactions would be included by other miners with smaller blocks, e.g. 2000 transactions per block, and he can not be sure there will be endless transactions with high fee. So I guess miners would not do that kind of high risk blocks

Still, no matter how high the fee is, the amount of transaction a miner can maximum process is limited by the whole network speed (or a software block size limit), so you eventually will have more and more transaction queued up in the mempool without any hope of being included, unless the internet infrastructure had a large degree of upgrade all over the world

First, a fee market will develop. Bitcoin users have to compete (by the fee / kb, maybe including actual validation cost) for block space, which is a finite resource. This means, when blocks start to get full on average, the average fee will probably rise, and become dynamic. It'll be market driven - miners will then have to compete to set the lowest acceptable rate for a transaction to be included in a block.

So, it's impossible to answer your question When the subsidy halves a few times, probably, but who knows what the price will be then.

Wait a minute you mean you'll live that long?
good for you, hope you won't suffer skin decease at the aged 60+ till 2140 and that you scratch your ass every minute of your entire life in the home of the aged.

Ok then you can expect the same thing in 2016, now it is even more well-known

Bitcoin didn't double in 2012 because of block halving. It went up because it became more known.

Speak for yourself about dying so soon. Some of us plan to live much longer than that.

If bitcoin is around in 2140 it means we reached mass adoption and solved the scaling problem.