I have read that there is an arms race in mining equipment, because you need a fast computer to get the 25 coin reward. When the reward goes away and the miners only get fees, I presume that there still will be an arms race because only the fastest mining equipment will be able to secure the fees. An arms race costs money, so the fees have to be high enough to sustain this arms race. Do you think that the fees will remain low enough to keep Bitcoin competitive to other digital cash such as VISA and so forth and so on? Will it be so profitable to mine, that the network can stay decentralized or will we end up with only one pool? Anyone who "knows" what will happen?
That depends. Let's assume every miner has costs of 1000$ to solve one riddle first. Then he will be rewarded with 25BTC = 1000$. This is an equilibrium. Now let's assume the price per bitcoin doubles (reward = 2000$). So the market becomes highly profitable. Either already working miners now will invest up to 2000$ to solve a riddle first or the amount of miners will double (or between). It's just a matter of costs and revenue. Wheter there will be few highly equiped miners or many less euiped miners can no one say.
