Topic: What will happen when all the bitcoins are mined? (Read 1572 times)
Bitcoin apocalyps
OK, I guess I understand where I made a mistake: I thought that blocks are bitcoins and did not know that blocks can have transactions information only and no bitcoins.
To be a little more clear bitcoins aren't in blocks directly; blocks contain transactions. One type of transaction is one that pays the block reward (subsidy + fees) to miners. It is called the coinbase transaction. There will always be a coinbase tx. Today the coinbase for a random block might be 25.2 BTC consisting of 25 BTC subsidy + 0.2 BTC in fees. In the future the subsidy portion will decline but every block will always have a coinbase tx. A block must have one and only one coinbase tx but may thousands of other transactions as well.
OK, I guess I understand where I made a mistake: I thought that blocks are bitcoins and did not know that blocks can have transactions information only and no bitcoins.
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To better understand something, I want to ask a question:
Does chain has all transactions information? I thought that only producing the bitcoin transaction can be done. I can not imagine miners mining without producing any bitcoin and in the same time making transactions available. Award in mining comes as share of a bitcoin, is it?
So, finally, I can imagine how it can work if all bitcoin produced. I understand that it may take huge time (but it is also concern; it means transactions will take longer time also, as I understand), but still, we talking about situation when last bitcoin produced, not before that.
Does chain has all transactions information? I thought that only producing the bitcoin transaction can be done. I can not imagine miners mining without producing any bitcoin and in the same time making transactions available. Award in mining comes as share of a bitcoin, is it?
So, finally, I can imagine how it can work if all bitcoin produced. I understand that it may take huge time (but it is also concern; it means transactions will take longer time also, as I understand), but still, we talking about situation when last bitcoin produced, not before that.
Yes, the blockchain contains the entire history of all bitcoin transactions.
Once all the bitcoins are mined, miners will continue to be payed transaction fees (how many times do we have to repeat this?). Blocks will continue to be generated every 10 minutes. If people stop mining because the reward drops then the mining difficulty will adjust downward so the blocks will still be every 10 minutes.
The block reward will never drop as much as it did last November, and it didn't seem like many people turned off their miners at the time, so I do not think there will be any point where enough of the network will suddenly turn off their miners to significantly slow the block generation before we get to another difficulty retargeting. So it will be like how today you get 7 blocks per hour, then we will get 5 blocks per hour for a while, it will not significantly affect the users of the network.
To better understand something, I want to ask a question:
Does chain has all transactions information? I thought that only producing the bitcoin transaction can be done. I can not imagine miners mining without producing any bitcoin and in the same time making transactions available. Award in mining comes as share of a bitcoin, is it?
So, finally, I can imagine how it can work if all bitcoin produced. I understand that it may take huge time (but it is also concern; it means transactions will take longer time also, as I understand), but still, we talking about situation when last bitcoin produced, not before that.
Does chain has all transactions information? I thought that only producing the bitcoin transaction can be done. I can not imagine miners mining without producing any bitcoin and in the same time making transactions available. Award in mining comes as share of a bitcoin, is it?
So, finally, I can imagine how it can work if all bitcoin produced. I understand that it may take huge time (but it is also concern; it means transactions will take longer time also, as I understand), but still, we talking about situation when last bitcoin produced, not before that.
the difficulty increases along with the increased hash power. Bitcoin blocks are found once every 10 minutes regardless of the power
That's not true when the hashing power on the network is increasing. The Bitcoin protocol only says that a block should take 10 minutes. Every 2016 blocks (two weeks at ten minutes per block), the amount of time it took to create those 2016 blocks is analyzed and, if it took less that two weeks, then the difficulty is raised to try and get ten minutes per block for the next 2016 blocks.
If you could suddenly invent a miner that could solve a block every minute (i.e. 10 times the current total hash rate) and put it onto the network, you'd get a block per minute for about a day and a half after which the difficultly would rise 10-fold. After that, you'd again get a block every 10 minutes.
With the current, almost-exponential, increase in hashing power there is definitely less than a block every 10 minutes. Just watch blockchain.info for a while if you don't believe that.
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As I understand, bitcoins will die with last bitcoin produced whenever how long it may take.
As to make any transaction bitcoin MUST be produced, just means without producing a bitcoin no transaction can be made.
Correct me if I missing something.
As to make any transaction bitcoin MUST be produced, just means without producing a bitcoin no transaction can be made.
Correct me if I missing something.
You are missing something: Transaction fees
As I understand, bitcoins will die with last bitcoin produced whenever how long it may take.
As to make any transaction bitcoin MUST be produced, just means without producing a bitcoin no transaction can be made.
Correct me if I missing something.
As to make any transaction bitcoin MUST be produced, just means without producing a bitcoin no transaction can be made.
Correct me if I missing something.
You are mistaken (but don't feel bad it is a common mistake). Let me ask you a question. If all the gold in the world was already mined couldn't you still use the existing gold as a currency?
Mining will never end (unless Bitcoin is abandoned) however the block subsidy (initially 50 BTC per block) will decline towards zero over time. It is important to think of the "new coins" as a subsidy. They aren't a "free reward", you ARE paying for them right now. You pay for them because every new coin reduces the value of existing coins. The network has real cost and it has to be paid somehow. A subsidy doesn't make it free for users anymore than if a government eliminated taxes and just printed enough extra money to cover its costs.
Miners are compensated with both the block subsidy & transaction fees. Satoshi always intended for fees to make up an increasing portion of mining revenue over time.
Remember:
1) Operating the network has a real world cost.
2) As a user YOU pay a portion of that cost regardless of if it is in the form of fees or subsidy
3) Over time the the share of the network paid by fees will rise and the share paid by subsidies will decline.
Then why are you here? You have decided that end state is an inevitability so it is only a matter of time before Bitcoin is dead.
No, not dead.
The ideologically pure Bitcoin might die, but Bitcoin as a currency won't.
Quote
No reasonable person looking at your original claim would "know" your true meaning is that in the future Bitcoin will be centrally controlled.
Yup, completely true, I forgot that things in my head weren't available to other people.
I think this sort of consolidation of power is inevitable, as the cost of entry keeps rising, both in hardware terms, and also in regulatory ones.
As I understand, bitcoins will die with last bitcoin produced whenever how long it may take.
As to make any transaction bitcoin MUST be produced, just means without producing a bitcoin no transaction can be made.
Correct me if I missing something.
As to make any transaction bitcoin MUST be produced, just means without producing a bitcoin no transaction can be made.
Correct me if I missing something.
Then why are you here? You have decided that end state is an inevitability so it is only a matter of time before Bitcoin is dead. So why are you here? Then again if you are going to be here don't make stupid claims that 51% of miners can change the reward especially not in the noob forum. No reasonable person looking at your original claim would "know" your true meaning is that in the future Bitcoin will be centrally controlled. You didn't say the Bitcoin Central control agency will force the block subsidy higher, you said 51% of miners will choose to pay themselves more.
To elaborate a little, this is what I see happening:
- Mining power get consolidated, as is already happening
- As block reward drops, transaction fees increase
- This starts to make small transactions inefficient
- Mining pools start to offer online wallets, and provide fee-reduced or fee-eliminated transfers between accounts on their own systems
(Which they can do, as they can choose to mine their own low-fee transactions, but not other people's)
- This leads to a few large entities which we might as well call banks at this point
- They control both transaction processing and mining
- Most users, and most merchants, will not want the hassle of running their own clients, and will not want to pay higher fees, so will sign up with one of the 'banks'
- To consolidate their control, interbank arrangements will form, which offer higher fees than intra-bank transfers, but lower than for non-bank accounts
- This will encourage all but the very largest of merchants to move their accounts to the mining 'banks'
At that point, network control is consolidated in a few hands, who can simply enact changes.
If Bitcoin becomes seriously profitable, it will be run by exactly the same sort of people who run all the other seriously profitable systems.
- Mining power get consolidated, as is already happening
- As block reward drops, transaction fees increase
- This starts to make small transactions inefficient
- Mining pools start to offer online wallets, and provide fee-reduced or fee-eliminated transfers between accounts on their own systems
(Which they can do, as they can choose to mine their own low-fee transactions, but not other people's)
- This leads to a few large entities which we might as well call banks at this point
- They control both transaction processing and mining
- Most users, and most merchants, will not want the hassle of running their own clients, and will not want to pay higher fees, so will sign up with one of the 'banks'
- To consolidate their control, interbank arrangements will form, which offer higher fees than intra-bank transfers, but lower than for non-bank accounts
- This will encourage all but the very largest of merchants to move their accounts to the mining 'banks'
At that point, network control is consolidated in a few hands, who can simply enact changes.
If Bitcoin becomes seriously profitable, it will be run by exactly the same sort of people who run all the other seriously profitable systems.
No that is not correct. Some miners could make the reward 100 BTC and it would be rejected by the nodes of every non-miner who doesn't switch. A 100 BTC block right now is INVALID. It doesn't how many people are mining them. Hashpower can't change the rules. 51% has no relevence. 1% of miners could mine 100 BTC blocks but they would be INVALID on existing nodes as would 99% of miners mining them.
Is that also true of SPV nodes?
I doubt there will be many, if at all, full nodes running that are not connected to mining operations in 10/20/50 years time.
Most people will have online wallets, all that needs to happen is that the wallet provider upgrades, the users don't get a choice.
As long as they are in control of they private keys and a single provider uses the Original their choice remains.
They could just take all their BTC to the other provider and abandon the new Chain, even if their provider doesn't support the old Bitcoin for transactions anymore.
I seem to remember seeing this question in every single bitcoin FAQ that has ever been made, why are we having this discussion again?
At least it is on the noob forum.
No that is not correct. Some miners could make the reward 100 BTC and it would be rejected by the nodes of every non-miner who doesn't switch. A 100 BTC block right now is INVALID. It doesn't how many people are mining them. Hashpower can't change the rules. 51% has no relevence. 1% of miners could mine 100 BTC blocks but they would be INVALID on existing nodes as would 99% of miners mining them.
Is that also true of SPV nodes?
I doubt there will be many, if at all, full nodes running that are not connected to mining operations in 10/20/50 years time.
Most people will have online wallets, all that needs to happen is that the wallet provider upgrades, the users don't get a choice.
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I seem to remember seeing this question in every single bitcoin FAQ that has ever been made, why are we having this discussion again?
If anybody tries to mine a block with too high of a reward, then that block is just ignored by the rest of the network.
Exactly. That wouldn't happen if 51% decided to accept them instead.
False. 1%, 51%, 99% it doesn't matter you can't change Bitcoin you can only fork it. When you do there will be two incompatible forks.
a) Original Bitcoin with falling subsidy high user support, and broad merchant acceptance
b) Inflat-a-coin with massive subsidy, negligible user support, and non-existent merchant acceptance
Nobody but miners win from switching to b so nobody will. B will simply die off and the miners foolish enough to switch will mine lots of worthless coins leaving the "loyal" miners who remain on the original chain richer.
murraypaul luckily you made this in Newbies, otherwise you would now get a bad commend from me. 
The users wouldn't have to switch.
They would have their transactions confirmed (most of the time) by the 51%, because they have more hash power.
Miner rewards are simply an extra transaction included by miners in each mined block.
Currently everyone agrees to use the same formula for calculating them (current 25 BTC per block).
I could decide to mine for myself, and pay myself 100 BTC per block instead, but noone else would accept my blocks, so there wouldn't be much point.
But if over half of the network decide to accept those blocks, those blocks get built into the blockchain, and the new reward structure works.
No, Bitcoin doesn't work that way. Miners aren't all powerful and dictate my Node which Blocks to accept and not to accept. My (and every Node) works by a protocol that says that the current reward is 25BTC per block. If you would credit yourself more, my Node (and every Node acting by the same Protocol) would simply reject it as invalid and not relay it to other Nodes. Even if you had 99% of the hashing power.
If all the BTC Users don't switch to their fork they would simply mine a new coin that nobody uses.Worth = 0. While the miners that staid on the old chain would get a nice chunk in transaction fees due to limited competition.
The users wouldn't have to switch.
They would have their transactions confirmed (most of the time) by the 51%, because they have more hash power.
Miner rewards are simply an extra transaction included by miners in each mined block.
Currently everyone agrees to use the same formula for calculating them (current 25 BTC per block).
I could decide to mine for myself, and pay myself 100 BTC per block instead, but noone else would accept my blocks, so there wouldn't be much point.
But if over half of the network decide to accept those blocks, those blocks get built into the blockchain, and the new reward structure works.
No, Bitcoin doesn't work that way. Miners aren't all powerful and dictate my Node which Blocks to accept and not to accept. My (and every Node) works by a protocol that says that the current reward is 25BTC per block. If you would credit yourself more, my Node (and every Node acting by the same Protocol) would simply reject it as invalid and not relay it to other Nodes. Even if you had 99% of the hashing power.
If all the BTC Users don't switch to their fork they would simply mine a new coin that nobody uses.Worth = 0. While the miners that staid on the old chain would get a nice chunk in transaction fees due to limited competition.
The users wouldn't have to switch.w reward structure works.
I could decide to mine for myself, and pay myself 100 BTC per block instead, but noone else would accept my blocks, so there wouldn't be much point.
But if over half of the network decide to accept those blocks, those blocks get built into the blockchain, and the new reward structure works.
No that is not correct. Some miners could make the reward 100 BTC and it would be rejected by the nodes of every non-miner who doesn't switch. A 100 BTC block right now is INVALID. It doesn't how many people are mining them. Hashpower can't change the rules. 51% has no relevence. 1% of miners could mine 100 BTC blocks but they would be INVALID on existing nodes as would 99% of miners mining them.
The only way a 100 BTC block becomes VALID is if users upgrade. Of course you will never get 100% of users to agree on anything so if some upgrade and some don't you would have a permanent split a fork. In essence two Bitcoins one which has a decreasing subsidy and rising value and one which has a bloated subsidy and crashing value. It doesn't take a rocket scientist to figure out which one will remain popular. The miners which switch to inflat-a-coin will receive lots of coins, the coins will just be worthless. Likewise the miners who remain on the genuine Bitcoin chain will see their difficulty fall and thus their profits rise.
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If anybody tries to mine a block with too high of a reward, then that block is just ignored by the rest of the network.
Exactly. That wouldn't happen if 51% decided to accept them instead.
Think of it from the other point of view, look ahead to the mining reward dropping from 12.5 to 6.25.
There could be hundred of millions of dollars invested in mining equipment by that point.
Difficulty will be so massively high that only huge pools would have any real chance of finding blocks at a consistent rate.
Why wouldn't people vote to pay themselves more money?
You would have to make a fork with a higher block reward. Anybody using the old fork will not accept your bitcoins. The people paying for bitcoins will of course choose the old fork with the lower number of coins.
If you could have 12.5 btc worth 1000 usd each or 25 btc worth 0 usd each, which would you pick?
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