Topic: What happens when the coins dry up? - page 2. (Read 7678 times)

Paypal transaction volume is ~ 2.2 billion tx annually (VISA is ~ 78 billion and all electronic tx is probably on the order of a trillion tx annually).

Still lets consider a 30 year goal of 40% the size of Paypal =~ 1 billion tx annually.  That is ~ 20K transactions per block.

ACH fees are ~ $0.20 per tx.  So 20K tx * $0.20 ea = $4,000 per block block reward.  Still I doubt fees would need to be that high.  At ~$0.05 (whatever that ends up being in BTC) per tx avg block reward would be ~$1000 which would support a network 5x as strong as the current one.

The eventual lack of new coins in misguided imo. There should be at least some new generation for replacement of lost coins and to encourage a low level of inflation.

Fees don't seem like a viable option. Coins are realistically in competition with real world payments, and at best would garner a couple % for fees (capped by the CC processing fees). However, since they are paid by sender and do not offer benefits that CC affords, I would venture that the fees should be more in line with fees for ACH (or equivalent systems), and thus, not that much.

An implosion of miners is NOT desirable since there has been much effort put in to lower costs of hashing. One could amass large amounts of hash power on the cheap and mount a 51% attack.

As long as the btc value keeps rising steadily to some point, fees will cover just fine for the miners i think. If the use of bitcoin doesnt grow, yea, then we are screwed.

The thing that will happen is that people with dedicated rigs will start pulling out as block rewards drop.  But on the flip side difficultly will also drop.  Once the block reward drops enough (and the difficultly with it) you would see more people solo mining (outside of pools).  The first drop in block reward (and I believe bitcoin's first real test of longevity) will be in this December.  The thing to watch is how the total hashrate and difficultly and how quickly.  I think there is a built in max change in difficultly of 400% up or down.  As long as the total hashrate doesn't drop too much faster than difficultly, you wouldn't notice a thing.  Also, as long as there isn't a sustained exudes of people from the community, you could expect the price for coins to rise (slowly) as people turn to buying coins instead of mining.

I do wonder what would happen when the coins dry up?

I hope I can get some mining things (a BitForce single or a cluster as Gfx cards use too much energy for what they give back to you-The HD5970s and HD6990s are an examples) so i can get a piece of the pie while the block rewards are still worth getting (50BtC,25BTC,etc). .I'll have to take out some (large) loans in future to help buy them then pay them off at some point in the future as I need to consider some things first (how many computer like things,can I fit into the airing cupboard (as I live in a place where very small budget like apartments are) without too much heat,noise,energy use as I hear of coppers busting ppl for using too much energy and to stop the neighbours  complaining about noise as I live next door to them)

FYI, transaction fees per day: (logarithmic scale)

https://blockchain.info/charts/transaction-fees?showDataPoints=false&show_header=true&daysAverageString=1×pan=&scale=1&address=

This:

You'd be better off just letting the topic die. If you can't think of a convincing answer to your opponent, the best strategy is to ignore him.

The idea is that in 2033 or whenever they do dry up, the reward would have halved so many times that we are used to the tiny payouts at that point and the value of a bitcoin (should) be dramatically higher than it is now, making mining profitable even at the end.

1/10 because I replied.

Problem?

Whuuuua?

Someone with a brain.

The coins won't dry up for over 100 years.  And the last set of blocks before the "drying up" will be for  0.00000001 BTC per block.  And the before that period, the blocks will be worth  0.00000002 BTC each.

It's a very gradual process, and there will absolutely be a crossover point where transactions become the larger part of the block reward.

That's the amortized cost. I hope nobody mistakes that for the marginal cost (which is close to 0).

Currently, cost per txn is about US$4-5. Of that, about US$0.000571428571 is txn fees [4 BTC per day in total fees/8000 txns per day; source blockchain.info]. The rest is block reward. That is txn fees make up about 0.01% of the funds supporting network security.

Currently, it would cost roughly $7-8 million to 51% the network. If the network was supported solely by these tiny fees, the cost of 51%-ing the network could be expected to drop to about US$700-800. A couple of 5970s would do the job nicely.

~0.04 BTC

How much is the typical transaction fee awarded when a block is found right now?

Miners will continue to expect more and more value out of blocks. By completely removing block rewards and relying solely on transaction fees, the miners will eventually expect nearly infinite value out of blocks. When that is not possible mining will happen less often, leading to lower confirmations. It could happen soon after a block-reward-halving. In fact, I suspect that for at least this first block reward halving, we will see the price double or more than double to accommodate the eventual change.

Whichever are the governments of the world at some point in the future will inevitably step in and demand X% transaction fees. It will be a very low number at first and gradually rise. Miners that refuse to include transactions with these fees in their blocks will be punished, even if they are doing so out of protest of the government, at this point controlled by the subsidized miners who now funnel lobbying money into the government.

I mean, we're talking decades probably before this happens again, but like with all things, it will happen. I'm guessing maybe mid-century some stupid mining operation run by an incompetent fool (I insult them here for the sake of posterity) will purchase equipment prior to a block-reward-halving and expect to have it paid off as price rises, but the block reward will halve without a significant move in the price of coin and they will lobby the government to force every Bitcoin enterprise operation in whatever the biggest Bitcoin adopting country is (Japan or China?) at that point to increase or mandate fees.

Again, the idiotic populace (again, insulting for sake of posterity) will conform to these fees and willingly give them up in the name of equality or security or some other contortion of values that the power that be deem as necessary for the "good of man".

In reality, the only threat that happens when the coins dry up is that the difficulty drops to a low enough point that the cost-benefit-ratio for doing a 51% attack increases. That threat alone pretty much ensures that anyone who has a significant stake in Bitcoin (processes lots of transactions) purchases their own equipment instead of piggy-backing on the miners themselves.

So the answer to your question: "Does everyone stop mining?" is yes, people stop mining, and the transaction processors are the only ones still finding blocks. We have yet to discover who that will be. My guess is that the transaction processors will essentially be the governments' biggest lobbyists at the time, though.

Yes, I have a very pessimistic and dystopian outlook. In reality I'm hoping it's not that bad, with multiple alternative currencies to compete with Bitcoin that do not have some of the same flaws. I'm worried that rather than make a new currency, the developers will be under increased pressure (vis-a-vis the miners, perhaps?) to fork Bitcoin to always provide some form of block reward. I think I'd rather see an alternate crypto-currency than a fork of Bitcoin.

I seem to recall seeing something here about one of the alternate blockchains dying from inattention, someone posting something to the effect that several episodes of corruption and a need for recovery preceded the ultimate demise.

The "spinning plates" ( a reference to the stage show where dozens and dozens of spinning plates are balanced on sticks and kept spinning by the performer running from one to the next to keep them spinning ) model of bitcoin operation has always given me doubt. The state of the blockchain freezing completely is not so bothersome, but what happens if mining declines is. With all the hashing horsepower that has built up out there it seems rather likely that an attempt to seize control of the blockchain could be successfully executed. Unlike the alternative blockchains there is enough value locked in bitcoin to make it an attractive target.