Topic: "Let's recap on what we've seen in the past few months" (Read 850 times)

Yes and that is why I agree that as the "reward" for mining decreases the transaction fees will need to increase or miners will switch off. As for pools who keep the transaction fees, their model will need to change as we move forward or they will have no members in their pool.

One correction.  Mining never ends.  When mining ends the Bitcoin experiment is over.

Block SUBSIDIES will continue to decline but miners will mine blocks ever 10 minutes into eternity.
Miners are compensated by subsidies & transaction fee.

If anything, fees are far down, from .01 to .0005 in the client on low priority transactions, and with many large users opting to not pay anything, just because they can. Also previous clients would send your bitdust and bitchange as a fee, now they don't.

Picking a higher fee in your own client no longer carries the same spirit of "donation" and "encouraging the network" since 90% of transaction fees just go into the pockets of pool ops, who already have decided their profit cut from the miners.

I'm quite eager to see what happens when the incentive to solving blocks halves from 50 to 25 coins/block. The market and mining community will probably go through a number of adjustments as some miners switch off, the inflow of new coins slows somewhat, and the relative scarcity of coins increases, hence raising value and further providing incentive to keep mining for those that are willing to wait it out. It will be a VERY interesting time  . The whole idea of the reward for solving blocks has at least two reasons as I see it. One is to bootstrap the bitcoin network, as the network requires many nodes, and their only incentive to continue running is to provide them with a stake in maintaining the network (that stake being bitcoins). Secondly introducing (or assigning) minted coins is based on their contribution, so overtime the stakeholders that provide the most infrastructure should get the greater share, but because bitcoins are artificially scarce, over time it should not be the network providing incentive but the users of the network to provide the incentive for maintaining the bitcoin network's infrastructure, hence why eventually the user's transaction fees will be what keeps the network going while the network protocol itself will slowly wean miners off newly minted coins and onto transaction fees. I guess it is expected (or perhaps hoped?) that bitcoin adoption over time will become prevalent enough to sustain itself just on transaction fees. I hope that this becomes the case but bitcoin has a ways to go. OTOH I for one think that bitcoin has performed exceptionally so far and is definitely headed towards a bright future, but I'm biased  .

Very true, I just hope that the transaction fees continue to increase over time. Many people have been used to no fees and I forsee a major shift in the way BTC is used and transfered once fees are basically mandatory.

Yes, this will be quite interesting.

I don't think that the hashrate will decrease abruptly when mining rewards will cease.
Until then the fees will increase step by step that there will be a smooth transition for miners.

There will be an interesting coherence between mining difficulty, transaction fees and the number of people actually mining (hashrate).
At the moment we only have just two variables, difficulty and hashrate, but by then we will have three.

There will always be "mining", you'll just be mining for transaction fees instead of the ever decreasing incentive payout.

My personal belief is that the future of BTC will be decided in the few months after the incentive payout ceases of becomes negligable.

I went with FPGA. It's silent and "environmentally more friendly".

re: the discussion here: https://bitcointalksearch.org/topic/m.498035

"..investors would just put them online and mine for themselves at a much higher profitability than selling the chips. "
https://bitcointalksearch.org/topic/m.499715

This is all new to me, but if my impression is correct, and the creation/use of ASIC would be limited to very wealthy people who saw the value in BTC, why wouldn't this person's point be accurate?  If hypothetically one could create an ASIC so much more efficient, keep this harvester for themselves, while selling a pathetic little brother version that would be superior to what we have, profitable to sell, but not compete with the one they kept to themselves...
Again, I know very little about any of this.  I saw "ASIC" & "FPGA" for the first time in this forum last night.


Also, if my understanding is correct, one day there will be no more mining, and BTC will still be a useful currency (should it not be replaced by something superior).  The ability to "mine" BTC is a pretty insignificant part of its value.  The fact that it has characteristics that no other currency (I'm aware of) has today makes it valuable.  Value is subjective, however.  Some people will want BTC because they believe that it's safer than any other currency.  The dollar is being printed around the clock, and the effects of this inflation have you to be realized.  One could easily surmise that BTC is superior to any inflatable fiat currency, and have no interest on ROI..  they simply want in, regularly, at whatever cost they can afford without disrupting their lifestyle.

BTCs is a very valuable currency.  It will increase in value in many ways as more people use it.  Virtually all other state printed, controlled, currencies are inferior in many ways, and losing value.  If the $, and BTC, maintain their same ratio in value, and other currencies continue to dive, people may choose to exchange into BTC because it's so much easier to do so.  Regardless of the scenario, as long as people are willing to trade "Hours", and other regional currencies not backed by anything, BTC will be superior to many of them, and have its use.  I happen to believe that the $ will continue to drop, thereby require more of them to exchange into BTC, despite all the other influences, because of the magnitude of inflation, poor management, and hassle of use, involved with $.

As the $ continues to be inflated, there will be a window where it's not reflected in greater costs , despite the greater availability of the $.

One last thing,  it seems like one of the issues here is the exclusive use of the ASIC/FPGA for BTC mining.  Is a more efficient GPU a better avenue?  Perhaps something else entirely that has uses other than as an efficient BTC miner (There's probably another obvious example I could mention if I wasn't pretty incompetent when it comes to all this technological stuff).


I appreciate the discussion everyone.  I'm trying to work my way through it all & decide which, if any, mining technique I'd like to utilize (or if it wouldn't be better to just exchange into them).


Edit:  BTC real value isn't in going from $ to more $, though that can be done, too.  It is a great, possibly best, medium of exchange.