Topic: What will happen when the number of bitcoins top off? (Read 1167 times)

The world will end.

Basically, yes. But to be more precise, what the gentleman above wrote.

Bitcoin is entirely voluntary.

You voluntarily choose to use software that enforces a fee on your transactions (or you choose software that does not enforce a fee and then voluntarily choose whatever fee you want including 0 fee).

Meanwhile all the peers you are connected to voluntarily choose whether or not to relay your transaction.  Many of those peers are likely to be using software that will refuse to relay your transaction if you haven't included a sufficient fee.

If enough peers have chosen to relay your transaction for it to reach some miners, those miners then voluntarily choose whether or not to confirm your transaction by including it in a block.  If there are other transactions that are paying a higher fee than yours, then the miners have an incentive to confirm those transactions instead of yours.  If you include no fee at all (or a very low fee), then many miners may refuse to ever confirm it to discourage such behavior from others.

So, the "reference client" that is released on the bitcoin.org website by the group that has voluntarily decided to call themselves the "Bitcoin Foundation" includes some well documented rules on fees.  Since a significant portion of the network chooses to run this "reference client", most users can feel reasonably confident that their transactions will eventually be confirmed as long as they conform to the transaction rules and minimum fee requirements in that particular client.

Specifically:

No transaction output less than 0.00005430 BTC
Transaction fee of 0.0001 BTC per kilobyte for all transactions larger than 10 kilobytes.
Transaction fee of 0.0001 BTC per kilobyte for all transactions that include any output less than 0.01 BTC.
Transaction fee of 0.0001 BTC for all transactions with a priority less than 56,700,000.

So fees are actually flexible as asked by the miners and also optional - is that right?

If miners stop mining Bitcoin is finished. So the incentive is there to let them profit for everyone who has a stake in Bitcoin.

Miners will still make some money.  Even today, mining fees can be 0.25 btc, I've seen some as high as as 0.4 on slush's pool

Let me explain why it will be most likely earlier than stated there:
Those numbers are true, if the network power is stable. But it's very likely to rise due to technical advancement (or more popularity).
Just take a look at this chart: http://blockchain.info/de/charts/hash-rate
The number of blocks found is adjusted by difficulty after a certain number of blocks, if the difficulty is rising that means blocks has been found too fast.

E.g. if difficulty doubles every adjustment, we would be there in half of the time.

I think it's reasonable to assume we will reach those steps 5-20% earlier.

It's important to note that pure mining fees are already around ~1-10% of the block reward.

If you look at the stats here: https://mining.bitcoin.cz/stats/, the block value for the recent blocks mined by slush's pool are stuff like 25.223, 25.06, 25.16, 26.36, 26.07, and so on.  (there is one block that's exactly 25.00000000 recently, though)

Look here: https://en.bitcoin.it/wiki/Controlled_supply

Some interesting milestones:

Block 1,260,000 (predicted to be around 2033) -- Block reward drops below 1 BTC.
Block 6,720,000 (predicted to be around 2137) -- Block reward drops to 1 satoshi
Block 6,930,000 (predicted to be around 2141) -- Block reward drops to 0.

The simple version:
1) Mining never end.  If mining ends then Bitcoin ends.
2) Miners are paid fees + subsidy.
3) The block Block subsidy declines over time and will reach zero in more than  120+ years.
4) When subsidy is zero then miners (obviously) are paid just fees.  Miner comp = fees + subsidy.  Miner comp = fees + 0.  Miner comp = fees.
5) It is highly unlikely that 8 decimal places will ever be insufficient and it is highly unlikely that 1 Satoshi will ever be worth more than 1 US penny.
6) Tx fees will not be a problem because they are volentary and are set by the sender.
7) Low priority tx have a "min mandatory fee" to protect the network from denial of service attack but this min mandatory fee can (and has 4 times) been lowered to accommodate the rising value of 1 BTC.


There is roughly ~$20T of currency (M1) used globally.  With 2 decimal places that is 2 quadrillion US pennies worth (2.0 x 10^15) and there are 2.1 quadrillion satoshis (2.1M BTC * 1E8 = 2.1 x 10^5).  There are more satoshis then there are pennies in the world (including US penny equivalents, all currencies, all countries).  In a (dubious) scenario where Bitcoin replaces all global currency and all other cryptocurrencies fail then 1S would be worth ~1 US penny circa 2012.   In any smaller scenario a satoshi will always be worth less than a penny.

They probably will not be extreme because transaction fees are actually a voluntary agreement between the miners and those who send bitcoins. You can choose not to give a fee, but your transaction will take longer to process because less miners will be willing to accept your transaction in the block they are generating. When no coins are generated as a reward, they will all expect transaction fees, but if they refuse one for being not enough bitcoins, another miner may take it. Thus, there will develop a balance between what we are willing to pay and what they are willing to accept.

Your kids will be long dead when the last coin is mined in 2140.

Transaction fees are voluntary, but miners are not obligated to process all transactions. As a result, the fee you pay is the lowest amount that you think a miner will accept. As the value of bitcoins goes up, the fee is likely to go down in BTC terms. On the hand, as the number of transactions increases, competition for space in the block chain will cause fees to go up in terms of value.

The fee will change, it did already change a few times.
(last time from 0.0005 to 0.0001 Btc)
Note that this is like a suggestion of a good fee from the standard client, miners decide what fees they want to accept.


And why exactly do we need that? In fact I think a slightly deflationary currency is better.
I appreciate it, when stuff is bought, because people want it, not because they fear that they will get less later on.

The number of possible decimals can be changed, there is no need to switch to something else, because of this limit.

False, it would be 2140 if the computing power of the network would be stable.
Due to the way difficulty adjustments work, the timespan will be shorter if the computing power is rising (more likely) or slower if it's declining.
It could very well end in 2040 or 2080 instead.

Our kids will be mining by this time.... and they will have to deal with it

Just out of curiosity: when/if individual satoshis or so become decently valuable, wouldn't the transaction fees be extreme compared to the actual amount of bitcoins transacted? Or does the fee change as well?

By the time that happens, Bitcoin will either be relatively irrelevent, or have conquered the globe. If Bitcoin is the global currency, its growth is proportional to the destruction of bitcoins and the net growth in value of all things on the globe combined. Bitcoins will become increasingly scarce compared to assets; if twice as many things are being traded at any one time, there must be twice as much value in the money supply (plus deflation caused by hoarding), and thus coin value must go up if coin volume does not increase.

That's why we need a slightly inflationary coin. Maybe I'll release one as soon as I get out of newbie jail

And perhaps, if it goes too far, we will end up needing to switch to something else, as Bitcoin has a limited amount of decimals. (Continued from the guy above me).

If the demand outstrips the supply, then the value will go up and the result will be deflation. Economists disagree on the affects of deflation.