Topic: The fee income is the future for bitcoin - page 2. (Read 2816 times)

I think that the miners cannot be rewarded by penalizing the users. The two communities must be in concordance and not in war with each other. Then what you mean with fee market? The fee we are talking about is the fee which goes to the miners. The market must be the place when bitcoin is used and not produced.

a 50btc txfee total is at the moment 0.012btc a tx.. (50btc/4200tx), lets average it to 1200txs of fee paying users = 0.04btc (over $9/tx)
who would pay $9 a tx right now to give miners a 50btc tx reward if block solving reward stopped today.

even in the future of 20mb the average customer usage and voluntary addition of a fee (cos not all blocks are filled and not everyone wants to pay) would be 45c at current btc price.

even if bitcoin went to $1000 a coin when the 20mb block limit was in place and every byte of the limit was filled with tx data, and every tx had a fee..

50btc/84,000tx =0.00059524btc/tx = 60c/tx

i think 50btc tx fee reward per block at any fiat price is asking too much.. i think the bases of keeping bitcoin active and useful would be a 1c/tx fee..
which based on a full 20mb limit and all users paying a fee. and btc value being $1000 each would be a 0.84btc total reward... definitely not 50btc.

That is a lot of but's and if's We hope to see a increase in transaction volumes, but we need massive adoption for that kind of transaction volumes. I also think most pools will combine efforts to get those 50 Btc blocks and the smaller individual pools will be pushed out of mining.

Let's hope the adoption increase enough to surpass the block rewards, long before it reach zero.

as mining rewards decrease. then yes transaction fee's would be more important to miners.

the issue is that USERS wont want to pay $10 a tx. they would want to pay 1c a tx.
so lets work out how much a tx will need to cost to keep miners happy.

so, matter what the value of bitcoin is or how many satoshi's are required.. a 1c/tx equates to a maximum of $42/block right now
(1c x 4200max tx)
(yes not everyone will want to pay a fee, and not all blocks will contain 4200txs so its going to be far less than $42 mining income)

even if the block limit grew to 20mb. the maximum potential would become at most $840(again dont expect that much, as its just a maximum potential).

so whilst current mining income via blocksolving reward is $6,000, this means that eventually on a 20mb block each tx would need to cost 8c to keep the mining reward in the $6000 range per block.

again 8c a tx is based on max potential if all 20mb of block was full and all tx's contained a fee.

so i predict that to keep the miners happy the tx would be on average atleast 20c each, which is where users will start to think its not as 'free' to use bitcoin compared to debit/credit cards.

Being a newbie, my understand is when bitcoin mining rewards goes to almost zero Satoshi. Price of one satoshi would go to approximately $10 or even higher. At that time people would pay their fees in decimals of one satoshi. yes at that time one bitcoin would be divisible for more than 10 decimals.

Are you suggesting that I'd pay $20 to move $10,000, and only $0.002 to move $1? 

The problem I see with this is that I suspect it won't be possible to enforce this 0.2% fee structure.  The reason is that from the miner's perspective, it costs him the same amount to produce a kilobyte of block space whether he uses it to record the $10,000 transfer or the $1 transfer.  This means that a miner would make a huge profit on the large transfer and perhaps even lose money on the small transfer.  How would you stop miners from undercutting each other?  For example, I would be happy to include the $10,000 transaction in my block for $10 (rather than $20) because my profit margin for that TX would still be huge. 

That's a very large topic, I will go for sleep now and analyze that later 

Rewarding the miners for their POW verification ensures the network's security.

Considering that the block reward will halve until it reaches 0, a fee market shall emerge naturally to sustain the system.

I know this but the tendency of this fee in time (if I'm not wrong) it is the decreasing and not the increasing as you propose. I remind that three years ago was much high than today's days. Your propose is in the the opposite. You think that your proposition have future?

It is the fee for every block, and there can be thousands of transactions in each block (today it is about 1000, thus the fee per transaction will be 50/1000=0.05 bitcoin, a bit high when you are sending 1 bitcoin, but still manageable)

Bitcoin's fee is fixed per transaction regardless of transacted amounts, this greatly benefit the rich people who are doing large transactions while punish the micro transactions, this is good mechanism to reduce blockchain spam, but still not a balanced design suits human behavior: Human normally don't care about the fee less than 1%, regardless of transacted amount. From network point of view, the cost is bandwidth and CPU time, so it can only be set on size of transaction data

If you are talking about of every transaction this mean that this fee must be applied even when someone will send bitcoins or use bitcoins to buy something. If this is the meaning of your reasoning this fee will be the dead of bitcoin. No one will use it because of it. So, I want to send 1 bitcoin and must pay other 50 as a fee? No way. Then this kind of fees are being decreased from the beginnings times and increasing.

Ironically, the only detailed analysis of bitcoin transaction value distribution is from a 2014 paper by Federal Reserve, it seems central banks really have the over view  

http://www.federalreserve.gov/econresdata/feds/2014/files/2014104pap.pdf



This statistic is from 2014, and if you look at www.bitcoinmonitor.com or www.bitlisten.com, it seems majority of the transaction value is now above 0.1 bitcoin

More about miners' motivation:

If you are an industry miner, you would like to grab significant share of the total amount of bitcoin, in order to benefit from the growth of this decentralized financial system. It is quite similar to investing in a company's stock, a larger share of stock will give larger benefits to the stock holder. But the block reward halving every 4 years put bigger and bigger pressure on miners so that they can not get enough amount of share later on

Imagine a group of powerful enterprises researched about bitcoin later and discovered that 75% of coins are already digged out and there is no way to get significant fee from processing transactions. They might just turn around and never look back, because even if they command all the hash power in the world, they would still mine maximum 25% of all the coins, just maintain the network for early adopters, that is not attractive at all

However, if they discovered that miners could now receive 50 bitcoin fee per block, then if they command all the hash power, they would be able to mine 50% of the coins in just 4 years! This ability to turn around wealth distribution table sounds extremely attractive and democratic, they would gladly join the mining industry, deploy high efficiency mining farms and become part of the ecosystem

Of course 50 bitcoin is a bit exaggerated, but 25 would still make it very attractive: In 4 years miners could get 25% of the whole bitcoin money supply, especially it will be extremely expensive if you want to buy 25% of the bitcoins from open market

Bitcoin's success rely on no barrier of entry, it should have total free entry for everyone, no technical,monetary or political barrier. Block reward halving created a monetary barrier of entry (so called early adopters advantage, the same barrier exists for land/gold/stocks etc... ) The fee is a way to remove this barrier

There is no difference. It is effectively 1 mining entity.

Anyway this is beside the point which really was that subsidy would return to 50 BTC.

There is a difference in CPU miner run by one person and a mining farm ran by a company or pool of individuals.
You cannot say mining will be as easy for one person as it was 6 years ago.

Large industrial miners are solving blocks alone everyday. What is this sorcery you speak of?

He was probably referring to big farm operations that exist now, but wither way, they could just create a pool of such farms and split the profit anyways.
It's not the "who" will/could of get such high block fee's reward, it's the amount that shouldn't even be considered possible due to high potential of influencing natural development of
bitcoin as it was designed.

Even when fee reward is 50 BTC, there no single miner who can earn it.
In the early days, you could mine blocks yourself, but with 50BTC fee reward in the year 2140 it will all be done by pools.

 

Explain.

By the time that happens, there will be no single miner able to mine the block alone and collect the 50 BTC fee reward.
Your logic doesn't take the increase in adoption into account.