Bitcoin Forum

Its production will drop by the half every 2 years, what happens when it reach numbers close to 0?

I know people who mined from the start will be rich, but what happens to the economy? People will stop to mine, how will the p2p network keep going?

I'm asking because I see bitcoin as a way to free myself from my government, I'm a libertarian, and I'm having a hard time to figure out how would bitcoin be a persisting solution for international currency.

I've done some researching, and there are a lot of people who consider bitcoin a pyramid scheme, including the developers of solidcoin.

There will still be a need for miners to verify transactions. You will still be able to send/receive coins even if there are no more to be mined.

At this point Bitcoin will be worth enough that transaction fees make mining profitable.

How can I bee so sure? If Bitcoin won't be worth enough by then, it can be considered a failure long before.


Yes, bitcoin is free money. Not as for free, but like free speech.


See: https://en.bitcoin.it/wiki/FAQ#Is_Bitcoin_a_Ponzi_scheme.3F

Also, why do you listen to the solidcoin "developers". Its nothing but a cheap copy of bitcoin by people envy of the early adopters, that want to be early adopters themselves. (I'm NOT a early adopter)

My BTC0,02 (without insisting you pay me! ;D ):

As the supply of BTC closes in on the 21m cap, its gold-like characteristics (scarcity) come to the fore. Each BTC will hold its value or appreciate in real terms with the expansion of the economy due to the absence of inflation.

Miners can profit from transaction fees (will they remain in the order of 50.000 satoshi?) or bomb out.

Bitcoin might look like a pyramid scheme at first glance but I see one major difference: Ponzi schemes are fraudulent inasmuch as they are based around pretence of the existence of underlying value, whereas BTC is a cryptocurrency with real underlying value in a working economy. Early adopters profit as a reward for having taken the risk of investing in the fledgling scheme before it flourished.

That was very helpful and clarifying. Thank you, Akka. I hope your answers will help people who had the same doubts that I had.

I'm more interested in what happens after a while, after enough people die and/or lose their wallets. Will we always switch to another type of 'coin'?

The difference between a pyramid scheme and a similarly-structured legitimate business is that a pyramid scheme doesn't provide a real product or service that has any value and instead moves around money just by enrolling new people into the scheme who bring the new value in themselves. If bitcoins never take off as a realistic way to transfer value from one place to another and all the value comes from speculation, then bitcoin will eventually collapse for the same reason all pyramid schemes eventually collapse.

It comes down to whether you believe crypto-currencies are a real product and a viable technology for use as a medium of exchange.

For the person who loses their wallet (e.g., forgot the passphrase, loss of hardware and insufficient backup, etc.), those coins no longer circulate.  That is unfortunate for the owner of those coins, but to the rest of those holding bitcoins the impact is neutral to just slightly positive (as the value of each bitcoin increases slightly).

There are no other decentralized digital currencies in the same ballpark as bitcoin (proof of work, where the level of work needed to be disruptful are well beyond the capabilities of a single actor).

People will continue mining because the block reward includes not only the new coins (50btc right now) but also a small fee component from each transaction. In the future, if Bitcoin has been successful, the value of these fees will be substantial and may even be worth more than 50btc per block.

Sites that make tons of transactions already pay significant amounts in fees to the miners. SatoshiDice.com has paid over 750 BTC over the last 5 months just in fees and all of this goes to the miners.

Technically, Bitcoins will never stop being produced! Hooray!~

I'm not sure, but I think the block reward drops in half every 4 years (not 2).  Which I think makes it more than 120 years before the last new bitcoin piece is mined.  In order for bitcoin to survive 120+ years, it will have to become in widespread use so that transaction fees will be enough incentive for miners to continue mining. On the other hand, I don't expect to survive another 120+ years, so I guess it doesn't really matter to me.

Are you sure about that?  I thought that once the block reward is less than 0.00000001 BTC, there would be no further new bitcoin mined?

Well judging by the hardware BFL is pumping out, it's scary how much GH or TH the hardware dishes out.
If anything the hashrate of the hardware will probably consume bitcoins. I don't know even when I say it sounds dumb, I hope. :<

It won't consume bitcoins, but it will rise the difficulty and make harder to get bitcoins by mining with gpu.

What if the precision has been increased by then? Could not the block reward then be 0.000000000000000001 BTC?

I hear it would take at least 150 years for all the bitcoins to be acquired as the internal software has a limit.

I hear people make up random statistics as their tolerance for actual facts has a limit.

You can make up statistics to prove anything. 83% of people will tell you that!

btc has done nothing but gone up in demand, with the exception of when Mt Grox got hacked.


With minners gone and small to medium sized stores accepting bitcoin it will only make it stronger

That would take a change to the protocol and there are no good reasons to continue providing a block reward at that point. It is not likely that a value of less than 1 satoshi will be significant for a very very long time. The value of BTC doubling at the same rate that the block reward halves (every 4 years) would mean a deflation rate of about 20%, which is not sustainable.

Why worry about what happens in many decades to come! The Principle is being proven and people can vote with their feet!

It's true it will take a very long time to completely stop and if the decimal place kept getting shifted due to rising bitcoin value then mining may happen indefinitely.

I hope they never stop, i just love the whole concept of "bitcoins"

By design, they will stop being produced. That's what the protocol says.

Or rather they'll be produced indefinitely but because the block reward is halved roughly once every four years, it won't be until far into the future till the reward halves from 1 satoshi (0.00000001) to no reward at all because bitcoin is only divisable to 8 places.

So while technically they'll be produced for a long time to go, in practice the reward will be so small miners will be paid through transaction fees instead.

Does the calculation lose accuracy each time the reward drops, or is it always based on 50*something?

What will the next list of rewards be after 0.09765625 per block?

I realised this is a dumb question because at some point an actual figure (i.e 50) must have been hardcoded into the software, and that software isn't going to get updated every single time the reward drops.

So obviously the calculation won't lose accuracy as time passes, but will always be based on 50*something.

Actually, since bitcoins are only divisible down to 8 decimal places, the reward drop will indeed "lose accuracy" on the 10th halving (sometime around the year 2048), when the reward will drop from BTC0.09765625 to BTC0.04882812 (it is always rounded down to the 8th decimal place, so there will be no confusion about it when the time comes).

I think in the end 1 bitcoin  will be = to 500 dollar. ;D

I believe it is technically handled by performing a bitwise right shift on the reward as an integer.

So right now the block reward is 5,000,000,000 which can be represented in binary as:
100101010000001011111001000000000
When we see the reward cut in half in a few weeks, the programming will simply chop a digit off the right-hand side of that binary number giving us
10010101000000101111100100000000
Which is 2,500,000,000 in base 10.

In 2048 the reward will go from 9,765,625 to 4,882,812
100101010000001011111001  (9,765,625)
10010101000000101111100    (4,882,812)

You can see that we will "lose precision" any time we chop off a one, and we will have a nice even halving whenever we chop off a zero.

For the list of rewards, try this:

http://lmgtfy.com/?q=0b100101010000001011111001000000000+in+decimal

Then you can just remove digits from the right hand side of the binary number to represent the number of "halvings" you are interested in, and you should see the new reward represented in "Satoshi".  If you want to see it represented in BTC, just move the decimal 8 places to the left after the conversion.

But which does nothing to explain technically how the reward is modified.  Are the reward amounts coded directly into the software? Is a divide-by-two floating point calculation performed with rounding to 8 decimal places?

I'm sorry I can't find you a source, but it's a bit shift of one digit.  Bitcoins are always stored as an integer number of Satoshis.

I believe you are correct, which is why I already explained it that way here:

Correct.

All values at the protocol level are 64bit integers (representing satoshis).  The block reward function uses a right bit shift.

https://github.com/bitcoin/bitcoin/blob/master/src/main.cpp

That code needs fixing by the devs.  It has undefined behaviour for large nHeight in the right shift operation, and as such is a security hole in the future.

I'd have hoped devs with their experience would know their programming language...

I don't think we'll have to worry about undefined behavior for at least another 130 years.  I can't think of any computer program that was running 130 years ago that is still running today.  I can't even think of any programming languages that were in use 130 years ago that are still in use today.

I agree that for the sake of well written code it should probably be handled a bit more carefully, but this isn't a bug that will concern me in my lifetime.

:o Ouch. Oh well, at least it's an easy fix and we've got over 250 years to implement it...

However, these truncated values are not hardcoded into the software, but rather the software still only contains the hardcoded 50 (100101010000001011111001000000000) with a run-time algorithm to determine how many times it's shifted.

So this means that it does not lose accuracy each time. i.e. The accuracy loss when a 1 is chopped off does not *compound*.

Example: Let's say we only had 1 decimal place and the reward started at 10, then at some point in the future we decide to use 2 decimal places. If accuracy loss was compounded we'd have the following series.

10.0
5.0
2.5
1.2
"Hey everyone, let's use more decimal places!"
0.60
0.30
0.15
0.07

Whereas if accuracy-loss is not compounded (i.e. only the initial 10.0 is hardcoded into the software) then we end up with a different series

10.0
5.0
2.5
1.2
"Hey everyone, let's use more decimal places!"
0.62
0.31
0.15
0.07

^interesting to know, thank you @helloworld for the easy to understand explanation

Except that right now the code doesn't use decimal places at all.  It works with integers, and then moves the decimal after the calculation is done...

So in your first example (ten plus 1 decimal places) you'd actually be working with 100, then right shift, then move your decimal, to get the extra decimals, you'd have to change your hardcoded starting number fro 100 to 1000 to get the extra precision and still have the starting number be 10 after moving the decimal.  So, you get the extra accuracy, not because the loss wasn't "compounded", but rather because you changed the number that you are starting with to an entirely different number.

This is my entire point (emphasis mine). The reward will always be based on a calculation where '50' (in whatever shape or form) is the only hard-coded amount.