Topic: Is there any chance the fee will rise to replace block subsidy? - page 2. (Read 5677 times)

We will have a consensus to the blocksize limit before block reward drops to a concerning level. When the blocksize is increased, there will be less rising pressure on fees because users do not need to fight for a place in the blocks any more. Lower fees and more transactions will keep the miners happy. If fees do rise to unreasonable level, there will be offchain settlement systems developed and users will use them more for smaller transactions. In general, I believe fees cannot rise to a level that completely replaces block subsidy in the near future.

We're all be dead by then. Bitcoin is sure widely use when that time come and so 0.0005 will be considered very little as well like how cheap we consider the transaction fee these days. You probably don't mind doing hundreds of transaction a day.

It's not a fact actually, not for now at least. The current fee level is heavily influenced by default fees (0.0001 or so). In the future, when fees are fully market-driven, yes, they can be decided by orphan risk. But we also need to consider several proposals that can and will make orphan risks lower, and, more importantly, independent ( O(1) ) from the blocksize (provided miner cooperation). Things like IBLT. So, the problem is even worse this way.

I think 2 is almost guaranteed, anyway this is bitcoin's anti-inflation promise: given same demand, the price will at least double every 4 years due to supply cut by half

The block reward halving is a 100% sure thing, the market will already price in it several months before, when it arrives, almost nothing will change, this has been proved by 2012 reward halving

Of course months following that event, some dumb miner which have done nothing will feel diminishing return thus start to shut down their rig, but the new miners with higher efficiency will be quickly deployed to compensate the loss in hash rate. Bitfury just announced that their new chip is 5x more efficient than the last generation, so a reward halving would still give them 2.5x increase in efficiency, resulting in higher difficulty

Second, many miners are not mining bitcoin for profit, they mine it for transfer value. Mining equipment company currently are not regulated by financial regulations, unknown capitals can enter bitcoin mining and leave it in form of fresh mined bitcoin without any trace. I guess the large bitcoin bubble in china and forever increasing hash rate regardless of exchange rate has something to do with large scale capital fleeing China. If you think about the nature of these mining operations, the fee is the least concern for them

So, difficulty will continuously rise due to fast changing mining tech, while total mining cost will still get higher and higher due to more capital entering mining and exchange to transfer value, these will all raise bitcoin's price, to more than enough compensate the loss in block subsidy

What's going to happen is little guys are going to quit mining. This allows bigger companies to mine less (use less electricity/hardware to secure the network), which eventually leads to centralization.

Miners *can't* be less greedy. It costs money for electricity (yes I know everyone thinks it's free, but it's never really free), money for the ever obsolete hardware, and time to keep the things running (yes, they do blow up). At ten cents a kw/hr it's about break even at .5w/gh. Buying .25w/gh will make a small profit but not cover the cost of the miner anytime soon.

Likewise this will *always* be the case. Note the price of bitcoin doubled, and so did the difficulty. They are tracking right now. When the halving happens, either the number of miners will drop in half or the price will double.

There's really no greed here. Actually everyone is perfectly greedy, that's what makes bitcoin go. The people who make money are people who make miners (which isn't that profitable) and the people who run power plants (who are the final source of power and money).

at the moment miners get $11,250 a block ($450x25btc)

or another way of looking at it

at the moment a block holds less than 1250 tx's per block
https://blockchain.info/charts/n-transactions-per-block
this leads to (based on bitcoins $ price divided by tx's) there being an average $8 per tx price
https://blockchain.info/charts/cost-per-transaction

another way to look at it
at 4.5cent a tx the most a miner would get (1250 tx or less) is <$50 right now in just tx fee's

if people want to only pay under 4cent fee, once the reward is not there, then each block needs to store 400,000tx just so that upto $16k a block just through fee's can be obtained..(or $10k at average current 62.5% capacity)

the solution would preferably that mining costs get cheaper, miners get less greedy so that the block limit doesnt need to increase to 200mb purely to pay them $10k plus every 10 minutes

I think it all depends on the price of bitcoin. If bitcoin price stays at current level, fees will have to rise to keep mining profitable.

The bigger companies are the only ones making profit. By nature, that means they continue mining. The little guys at home continue losing money so they stop mining. How are the big guys being hurt when they're making profit AND that profit keeps going up?

The ones that lose are hardware operators and not those 5-10 miners. It's not a big deal if the hardware operators lose.

Technically, it IS easy. The cost of modern systems is because of all of the red tape surrounding everything. If they didn't have to comply with so many regulations and systems, it wouldn't be that expensive.

You want to send any amount of money anywhere in the world in just minutes, for less than $.04? Good luck designing that system. Such a reasonable request, it must be easy to do.

I couldn't agree more. Though some would argue that this leads to centralization (the richest get the cheapest hardware/rates so run the longest).

How about we just let the miner bubble pop and half of them shut down instead of subsidizing them?

Not everyone that bought a miner can win no? They bought an investment, a risk, some are going to loose, let them loose..

Send the same $0.40 on PayPal or another like site and you've lost almost 100% of it to fees. BTC is still cheaper.

I already hate the fees. It annoys the hell out of me and I know its how the system works.
Its annoying to send .001 lets say to someone and get a huge % tax in fee's

Well hm.

Fact is miners live to make money, if there is no profit in mining people will stop doing it till mining is profitable. Right now there is a mad rush to buy .28w/gh mining gear (I'm not quite sure why) and probably a ton of .8-1.0w/gh equipment sitting on the sidelines.

But think about it: If the price of bitcoin suddenly dropped to 225, then the mining difficulty would drop to about 50 instead of where it is now. Because at a 25btc block reward, a difficulty 50 was enough to eek out a profit at 225 a bitcoin. Was the network any "less secure"? I don't really think so, your chances of breaking the chain were basically zero then as now.

So when the block reward halves, either one of three things will happen:

1) 50% of the miners will drop out.
2) The price of bitcoin will double
3) Fees will go sky high.

I doubt #3, although it is nice to see miners demanding fees these days. #2 is possible, but more likely the less efficient miners and people fed up with heating their homes will drop out. No biggie, the network will adjust and it will still take 10 mins to confirm a block.

Now some people will say "yeah, but you can take that 50% that fell out and do a 50% attack!". Sure, but first:

You have to find the miners, they're all over
You have to incent them to mine again on a super-evil blockchain. That will cost 25btc every 10 minutes
You have to get them all to agree to fuck the chain for money
You have to keep paying them to keep their less efficient farms running away.

I strongly doubt this will happen. So no biggie.

People say this but not necessarily. It's all an open market. If people are still mining with the current fees, it will stay as-is. If they stop mining blocks, people will raise fees.

Of course, When something goes, something comes. The fees will probably have to rise to match the missing bitcoin, or to make up about half of it. That's a big problem that we face.

This conclusion is based on the fact that the fee per block is decided by the orphan risk, and the loss from a orphaned block is decided by its subsidy. So as block subsidy goes down, the loss from a orphaned block also goes down, and the fee per block also goes down

If orphan risk rises exponentially above certain threshold, for example 2MB block to take 10 minutes to broadcast to majority of nodes, then maybe fee will rise quickly to get close to block subsidy