Bitcoin Forum

I was thinking about the incentives for miners. Now there are two incentives:a reward in newly created bitcoins and a (smaller amount) of transaction fees. At the time no new bitcoins will be created, and the fees are the only incentive, I guess it will be less motivating for people to mine. Which leads to (much) less computing power on the network and an increased likelihood of someone frauding the chain. What do you guys think of this?

I think about this a lot... what will happen to the network once close to 21m BTC have been mined. There is no reason to carry on mining and supporting the network.

The transaction fees will be a reason to continue. But I don't know if this will attract a large group of miners (at least not as many as now). And if that is the case, the computing power on the network* will decrease, making an attack (fraud) more likely.

One would hope that Bitcoin has become so wide spread that transactions would be going through at an insane rate. This would allow miners to make a considerable amount from TX fee's.

It's definitely worrying though.

Ahhh very interesting... Is it true the 21 million BTC are expected in around 2040?

Yes.

So why:

?

2140

This won't be a sudden change.  The size of the block subsidy in the block reward will slowly drop over the next 127 years.  At the same time, the volume of transactions will (hopefully) be increasing.  When the block subsidy drops to 0 BTC, it will be dropping from being 0.00000001 BTC per block for the previous 4 years. If someone doesn't find it to be profitable to mine with a 0 BTC subsidy, they probably didn't find it profitable when the subsidy portion of the reward was 0.00000001 BTC either.  During the 4 years before that the subsidy portion of the reward would have been 0.00000002 BTC.

If the value of the transaction fees isn't enough to keep miners mining, we will slowly see the network hash power drop over a period of several decades.  That will be plenty of time to find another solution.

moores law pretty much guarantees that with ASICS and transaction fees there will always be incentive and profitability in running the network and processing transactions.

So can someone explain the difficulty vs. the price of the bitcoin.  Even if the difficulty rises significantly if bitcoin goes up a lot it would still be worth mining.  or am I missing something?

I guess my main question is, is it worth investing in a rig (GPU) right now or just use the money to buy bitcoins?

Buy bitcoins  :)

Well the block subsidy has already decreased from 50 to 25 so obviously the incentive for miners has fallen and the network computing power has gone down.  Er wait it hasn't.

Buy or mine Litecoins not BTC

Are you really advising a newbie to buy Litecoins? Stop your lame attempt to make him inflate this bubble even more.
The FIRST crypto-currency a newbie should be is Bitcoin. Period.

After hours of reading about their differences, their strengths, theirs weaknesses, their devs, their future development, then he can wisely chose whether he wants to risk money in one or more Bitcoin clones
Actually he should even buy Bitcoins only after all this reading

If the value of BTC keeps going up, anyone that holds a good amount of BTC will be incentivized to help out with mining to make sure their investment isn't attacked by having the network hash rate drop too low, but with the low power cost of ASICs people will just likely keep them plugged in for a long time

It is interesting that people care about what will happen to bitcoin after the year 2140  ;D

That is still a long long time away, lets party while the sun shines :)

2140, but what's 20 years between friends?

MOST people don't.  MOST people are short term.  

I have a belief in reincarnation.  Not a very strong belief but there is some scientific evidence.  I don't really care about the fate of Bitcoins in 2140.  I do care if there is a civilization that even remembers the meaning of Liberty in 2140 but there isn't much I can do about it.

Hey if bitcoin takes off we can buy robot bodies or cloned organs and still be around then...  There has to be a decent amount of crossover between bitcoin enthusiasts and those who believe we're nearing the technological singularity.

It will be interesting to see the days when fees consistently match or exceed the block rewards.


No worry here.  The mining pools and few people who decide things will find an optimal max block size/min tx fee to maximize incentives :)

What do you mean "if it takes off"?  at $130 per BTC and no real move yesterday when the new of LR hit , BTC has taken off, We missed that train newbie :)   As I read on another post -  "If you start running now, you might just catch the LTC train"

There will be incentive to mine just to protect value of your Bitcoins. Many gold miners who just mine and convert to USD will be gone, but others will run miners just to protect Bitcoin network.

I think in 127 years, processing power wont be an issue, just like ASIC are emerging now, new technologies will keep us up to speed so that it wont be a concern. Plus the transaction fee can be increased per transaction so there ill always be a way to make it worth someone's HR to do it.

By 'if it takes off' I mean widespread adoption leading to another 100x increase in price over time.  It's only been 4 years, and we're talking about 127 years from now.  Even if bitcoin becomes the de facto internet currency for a decade or two it could still be a historical footnote in a century.

When Bitcoin start in 2009 nobody believe in it, year ago BTC was $10 now over $120

When Litecoin start in 2011 nobody believe in it and was worth 7 cents now about $3 (42 TIMES more!)

Do You see a pattern here or You are too blind?

Look at http://ltc.block-explorer.com/charts NUMBERS DON'T LIE

Look at this http://www.forbes.com/sites/jonmatonis/2012/06/22/the-bitcoin-richest-accumulating-large-balances/ (http://www.forbes.com/sites/jonmatonis/2012/06/22/the-bitcoin-richest-accumulating-large-balances/)

When this smart guys sell BTC? Click on each to see!

For example: http://blockchain.info/address/13vJZKHKBirruXwmjMaRtakzPQRRHQit1S (http://blockchain.info/address/13vJZKHKBirruXwmjMaRtakzPQRRHQit1S)

50,180 BTC change owner at 2013-02-01 when price was right !!!

With 2Gh miner you can mine 2.5 BTC/month BUT over 3 LTC/day so it's WISE to mine LTC now and keep them till 2014 or 2015 or buy LTC if you can PERIOD.

You are right, numbers do not lie.  It is the interpretation of the numbers that is suspect.  You look at the numbers and see what you want to see.  Others look at the numbers and see a bubble.  Only time will tell.

Grunch.  Very tough to predict what will happen that far in the future, but likely transaction fees will gradually increase throughout the period... Or something will have replaced bitcoin by then.

If BTC really takes off, you will have a hot-water-tank and space heaters using ASIC' as heatsource.

The transaction fees will become larger than the block-reward long before the last block is mined.

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