Topic: Will the bitcoin network be affected if? (Read 364 times)

Oh really?
Feel free to drop on my topic:
Angry at the high fees? That's what everyone predicted the future will be like!

At the high of the "spam" attack fees ere just half of the reward in value, how do you plan on making people pay twice as much as they did and still have thousands of users?


Completely irrelevant! People still make this mistake of thinking more efficient gear means automatically more security, guess what, it's not!

One machine being capable of mining at 300th/s and worth $10k doesn't mean the network was completely insecure when the whole hashrate was 10 th/s nor does it mean that with the new generation of twice more efficient machines as the S21 automatically the network is twice as secure as it was when S19 ruled.

What really matter is the cost of of a 51 attack:
So right now you need 2 million s21 $12K and 5KW machines to reach 600exa do it, at a cost of 24 billion
Let assume you have a ten times more efficient machine than the s21 and that everyone pays 1 cents per kwh but the reward is no longer $30 millions but $30k
That means miners will afford to spend 200k on energy each day, so 2000000 kwh, so that will be only 16 000 miners, generating 48 exahash.

And suddenly even while having a ten times more efficient machine and 1 cents energy, your network can be attacked with 192 millions instead of 24 billions, 125 times cheaper despite having only 12 times lower hashrate. So despite a 10 times more efficient machine the security has still gone done 125!? Why? Because it wasn't possible to offset the drop in reward even with completely unreasonable 1cents/kwh and a ROI that would take 50 years!

I doubt any body would pay a THOUSAND Dollars Fee.  By the time Bitcoin is worth a million Dollars, I presume it will be possible to spend millisats and such.  We can not have a Currency with the minimum denomination so high.  I at least think it would become useless otherwise.

The solution is not moving to Proof of Stake anyway.  That would be the worst thing for Bitcoin.

The mining of Bitcoin is the major echelon on security in the Bitcoin Network, where miners will be rewarded to solve complex mathematical computations and also the security of the network is intertwined with it, if the miners at some point decline the mining then it will affect the network but I don't see it happening as I believe solutions are coming up on a daily basis to make the technology robostly secure.

Inasmuch as the adoption of bitcoin is still increasing in the future, and as many people are using it, miners will still retain there jobs and their rewards will still be guaranteed. If it gets to the point where many people starts using bitcoin p2p for transactions, then the congestion will necessitate miners to high their fees because many people will be competing for their transactions to be confirmed. Unless the adoption of bitcoin reduces or stopped,  then we'll have a real reason to worry. Bitcoin is popular today because of it's business profitability, more people use it mainly for investment and trading purposes, instead of a means of payment. This can pose a challenge in the future, because it is using bitcoin, as a means of payment that than skyrocket it's adoption. So left in the hands of mainly traders and investors, without being a means of payment will affect the miners negatively in the future, for obvious reasons.

If there are fewer miners there then it's definitely a security threat for the Bitcoin network because it is more possible to execute the 51% attack when less hash power in so they can take control of the blocks but I don't think the possibility to happen is less cause even if the rewards in terms of BTC decrease, I expect the value of sats will be a lot higher than now so I would assume that 0.3BTC fees in the year 2150 will be more valuable than 6.25BTC+0.3BTC in fees in 2023.

Smart miners will continue to mine Bitcoin in a bear market because they know when halving comes, more hashrates will come while block subsidy will be halved so they will receive less bitcoin with same hashrate and power from their mining operations.

Around halving, Bitcoin network will see big change in network hashrate and difficulty and with high volatility after halving, new miners will join with greed and they will be most vulnerable Bitcoin miners on the network. They don't have experience and don't understand much about this mining industry, bitcoin market and they even make loans to invest in ASICs and mine Bitcoin. So when price has correction, bear market comes, they will leave but experienced miners will stay and continue mining. The cycle repeats and they will get big profit with a next halving and bul run.

The important thing to realize is that halving is a very slow process and it becomes less and less significant on each halving. That means for example in the first halving the reward dropped by a whopping 25BTC which is a huge decrease. However in the coming halving the reward will only drop by 3.125BTC which is a much smaller decrease.
And most important of all, it takes nearly a century for the reward to reach zero and speculating what the network will be like by then is moot.

price would correct and the macro path and map of economics and all crypto related would correct it's course so it won't happen, or it would be a disaster of sorts.

When miners have to rely only on fees, the bitcoin price would not make much difference. It's not like you'd be happy in paying $1,000 fee just because BTC is worth $1 milion.
The real problem would be creating an environment where fees are affordable but not too low, and where there's enough demand for on-chain transactions.
I think the most feasible solution would be either to change the algorithm to PoS, or just hoping that big crypto-businesses will take on the mining themselves.

Your question is harmless of course and I believe it's a sensible one which I've thought of many times myself.

In my understanding, nothing will affect the security of Bitcoin going forward, but this is as long as they do not tamper with it too much in the name of scalability reasons.

As for the downsizing of the block reward due to halving, this is normal and well-expected by the miners, but they do not have any choice in a normal Bitcoin network, the fees will still be the same in Sat/vb. But of course, the more the price of Bitcoin increases, the more the value of Satoshi increases. It will continue like that unless the network is congested like what we experience now which makes miners happier as they earn more fees.

Yea the time to completely mine bitcoin which is around 2140 is very far from now but before that time I don’t think there will be much significant change again. The reward will be around 0.1 come 2044 which is 20 years from now from beyond that time the reward to mine a block wouldn’t be too enticing again. Also except the transaction fee increases I don’t think even the bitcoin price which is supposed to be high would be enough to keep the entire network decentralized because maybe other miners would have quit but just as you said let’s allow time decide that

Actually the mining reward in terms of Bitcoin will reduce like you rightly observed but it is expected that the price of Bitcoin will increase to balance this. If the price of Bitcoin doubles and the mining reward is halved, there is a balance and not effect on the entire ecosystem. However, this is under ideal situation. Unfortunately,  ideal situation is always different from reality and the price of Bitcoin is not guaranteed to double when the mining reward is halved.

The best we can do is to allow time unveil how things will go but be rest assured that there will always be a way out.

It is not a harmful question to be exact. Don't worry about the mining reward as it will take a long time before all of Bitcoin is mined and even though there's no block reward but still miners will still earn from transaction fees. The reward that miners will get depends on the price of Bitcoin so, no matter how much BTC that the miner will get the value would still be same. Let's say that the miner get 5 BTC where the price is around 37k to 40k then that miner will get 185k if 37k and let's say miner get 10 BTC in the future and with the same value in dollars which is also 185k.

theory?
the market is not a single wiggly line.. there are 2 invisible lines aswell.. called 'value' and 'premium'

the value line is the periodic "bottom" support. its the world wide most efficient cost to acquire bitcoin (cheapest mining) no one wants to sell below this so sells run out. meaning a bottom support line protect bitcoin from "crashing to zero value"

the premium line is the periodic "top" resistance. its the world wide most inefficient cost to acquire bitcoin (expensive mining) no one wants to buy above this because they can mine for less so buys run out. meaning a top resistance line prevents bitcoin from "going to the moon" in one shot of extreme exaggerated uncontrolled ATH overshoot

the market price speculates above value and below premium.

as rewards halve and mining costs increase the value/premium lines move up.. and the market speculates higher within the raise window of value-premium

however if the hashrate competition was to decrease long term to a high amount of less hashrate. meaning the remaining miners get more coin(cheaper) this can lower the value-premium window. which then brings down the market price speculation within

In theory.  Remember.  In theory!  Bitcoin price should increase enough for Mining to still be worth it even if Miners will be living on Fees only.  This is why I am always amazed by the genius mind of Satoshi.  He thought this through extremely well.  If Block Rewards are zero, what plays the biggest role in Bitcoin pricing will be scarcity.  Which will increase as people lose their Coins, adoption increases et cetera.

Anyway.  Consider the following,

We are SO many decades before we even get to the day when Bitcoin mining as we know it today ends.  As in there will be no more Block Rewards.  Look how much Bitcoin has changed only in the last decade.  Imagine how much it will change in the next century, when Block Rewards will finally stop.

What if Block Rewards will actually not stop.  There is no guarantee Bitcoin will be the same.  Look at Ethereum, no body would have predicted it would move to Proof of Stake six to seven years ago.  Yet here we are.

Monero has added some sort of 'burn' which has not existed before.  There will be changes and Bitcoin will adapt according to the times we will live.  No body alive today will live the day Bitcoin Block Rewards end anyway.  I think and hope future generations will take care of this aspect.

alot of people think bitcoin is stuck at a se/stable  $XXXXX/btc and it requires a fixed tx count paying from $x/tx fee to need to pay $xxx/tx fee to make block total fee be equal $XXXXX/block

this is not bitcoin economics.. its bad math and stupidity
first the spot market price gives the reward a pay rise..
secondly the tx count per block should increase to cause the 'block fee total' to increase over time without harming the fee per tx.

if we tried to fix the spot market volatility and keep tx count per block fixed. then bitcoin will have issues where less miners would want to operate..

so allowing the spot market to do what it does now and speculate, the next decade+ will be fine all by itself. and also trying to get devs to increase tx count per tx. then the future (30+ years) will look after itself when block total fee's becomes a little more important

we had this debate years ago
when the reward was 25btc heading towards 12.5 in 2016, many BAD economist devs touted a myth that users needed to pay enough tx fee to total the other 12.5btc... that was a lie as the market spot looked after the miners.

when the reward was 12.5btc heading towards 6.25 in 2020, many BAD economist devs touted a myth that users needed to pay enough tx fee to total the other 6.25btc... that was a lie as the market spot looked after the miners.

now with the reward 6.25btc heading towards 3.125 in 2024, many BAD economist devs are now touting a myth that users need to pay enough tx fee to total the other 3.125btc... that will be a lie as the market spot will look after the miners.

we dont need to demand tx fee's that meet/exceed block rewards for several more halvings. so relax

The hash rate will at some point peak, and then likely fall a bit until it reaches an equilibrium based on income from tx fees alone.

This will mostly take place over the next 20 years or so, by 2044 the block reward will be less than 0.1 BTC. Today with a 6.25 BTC block reward and a price of $38k that's about $237k reward plus fees. In 20 years with a ~0.097 BTC block reward and let's say a price of $1.2 million ($1 mil to $1.5 mil is a likely price range at that point) that's about a $116k reward.

So sure in dollar terms reward will likely drop by half over the next 20 years, and even more when considering inflation. But over these 20 years mining will also continue to become more efficient, both in terms of efficiency of ASIC mining devices as well as the industry continuing to find cheaper and cheaper energy prices as the market naturally settles into the most efficient places to mine, including likely a large increase in cheap renewable resources used for mining. So while the reward will drop in real value, so will the cost of mining. Also tx fees will likely be 5-10x higher by then on average, thus helping to offset some of that decrease in reward value.

There's never going to be some big drop off. So it won't really cause a problem. At some point likely in the next 20 years mining hash rate will peak as Bitcoin's price stops more than doubling each halving (thus making the halving overtake price gain in terms of mining reward) and so mining margins will start becoming tighter and less efficient miners will be kicked out of the market permanently. Hash rate will likely gradually drop until it reaches an equilibrium balancing the small but still dropping mining reward, the probably slightly increasing tx fee reward, and the more efficient mining machines plus cheaper electricity used for mining.

And there is zero problem with hash rate reaching a peak and then declining a bit to an equilibrium. That equilibrium hash rate will likely be higher than it is today. And even if it isn't, Bitcoin mining is so large today that the bitcoin blockchain is globally secure (as in nothing in the world can attack it) and has been for years now even when the hash rate was much much lower. At this point there is essentially no threat of a 51% attack possible. The biggest threat would be if several very large bitcoin mining operations went out of business and sold all their mining machines on the cheap and they all went into the hands of a single malevolent actor. But that isn't remotely realistic for many reasons. So even as some miners are turned off and the hash rate declines and then reaches equilibrium, this doesn't really cause any problem for Bitcoin because it is already well past having reached the level of being globally secure and the equilibrium level will certainly continue to be globally secure.

And of course it mining has no effect on the amount of transactions or the cost of transaction fees (as lots of people think) so there is also no affect on the operation of bitcoin either. When hash rate starts its temporary, though likely fairly long, period of decreasing toward an equilibrium the change will be gradual over many years so the difficulty adjustment easily handles that and there won't be any exacerbated transaction congestion issues related to this.

And by the time by late this century when the block reward is just about all tx fees, the mining industry will likely be running entirely off a combo of stranded already-built renewable energy with near zero cost of operation, as well as operating at most renewable energy power plants running only off excess power generated at high generation times thus being very cheap. So the vast majority of electricity cost for the mining industry by then will be extremely cheap as the market will have settled into the cheapest and most efficient places by design because those will be the only places where mining can still be done affordably. But with an entire planet of such places there will still be plenty of mining happening at a globally secure level.

Miners receive bitcoin from block rewards and transaction fees. When block rewards halve to be small enough, transaction fees will become more important for miners.

No guarantee but with past halvings, price increases a lot too and more than doubling of its price before halving. Miner income even becomes more than x2 than before a halving. With transaction fees, because users have to compete each other to be chosen by miners for confirmation, miners will enjoy periods when mempools are loaded too much like recent months with appearance of Ordinals.

In future, with bigger adoption of Bitcoin, demand for on chain transactions and miners will take advantage of it with transaction fees.

It is true that the return from mining decreases like the value of Bitcoin, but it is not the same as the return in the dollar, as it is true that the return from a block was 25 bitcoins, but the price of bitcoin was different from the return when it was 12.5, as the return today in dollars is $227,500, which is the same as the return of 3.125 BTC At a price of $73k.


BTC Miners' Profitability as Hashrate will explain part of what I mean

This could actually be a real problem that many people here would try to shrug off.
The good thing is, the block rewards will not completely disappear until something like 2120 (quoting from memory), but they're being slashed in half around every 4 years, so unless BTC keeps appreciating in value in line with the reduced block-rewards, miners would be reliant on the fees in a not-so-distant future.

The problem is, blocks can't fit that many transactions, so unless the fees are huge, the financial incentive could be much lower than it is today, which, in turn, creates a potential security threat (i.e. unused mining power being used for double-spends etc).
Pushing people off the blockchain into 2nd layer solutions (Lightning Network) could solve the problem of high fees for BTC users, but it makes it even worse for the miners.

This problem is definitely worth discussing, but, at the same time, I wouldn't be getting stressed too much about it. We'll cross that bridge when we get there. At the worst case scenario, with enough community support, we could change the algorithm to something else.