Bitcoin Forum

I will not go too far in years and let discuss situation in year 2060 (42 years from now.)  In these 42 years block reward will halved 11 times and block reward will be 12.5/2¹¹ or 12.5/2048 = .006BTC approx.

If I check Network difficulty, it seems to be increasing with each passing month (No volatility in Hash rate as opposed to price :)  )

Since rewards are diminished so transaction fees will become main source of income .

 If Network hash rate kept the same pace then for mining to be profitable , we are left with few possibilities.
1. Bitcoin price should go high or
2. Transaction fees should be more or
3. Hash rate reduction (Miners leaving the bitcoin Network)


Now exploring the possibility that Bitcoin price has gone high then it means the user that are paying in satoshies as  transaction fees are paying more than the conventional system so there is no incentive  to use bitcoin for transactions. Same   logic is  valid for if transaction fees become higher. We are now left with option of  Hash rate reduction so that mining + transaction fees still remain profitable but hash rate reduction will only be possible if some miners stop mining(or leave the Network]. If miner start leaving the mining then  difficulty will decrease but network now have few miners and  make the system centralized instead of de centralized.
 
It look to me every thing like Decentralization,BTC price and  transaction fees are all connected to each other and we should fix block reward as 1BTC  if rewards goes below than 1 BTC,.

do a quick search about "what happens when all the bitcoins were mined" and you will find this question which has the same answer as yours has been answered at least once every week for at least the past 3 years.

I have already read so many articles before creating this thread. If you see closely then you will find all of these articles end with the points 1,2 or 3 and these authors never tried to explore beyond this point.

This thread is open for discussion for these scenarios.  I hate to say that but it looks to me Bitcoin network cannot remain functional with diminishing block rewards or solely dependent on transaction fees.

As a bitcoiners, we take pride how robust this network is this network is that doing 51% attack is almost impossible. Do you think that we can keep the Network robust without any block rewards or little block rewards?  In current price .006BTC is less than $50 USD and you can add couple of few hundred Dollars as a transaction fees.

Now if you say transaction fees will be high then it means that you are paying a premium price for a convenience of doing peer to peer transaction and doing transaction in traditional banking system will be cheaper.

Lets keep transaction fees same then it means network difficultly should go down so that Bitcoin transaction is profitable for everyone but it will raise the concern of robustness of the network.

Diminishing block reward can trigger a vicious circle of transaction fees  vs network difficulty and we are not very far from this point .(may be next 18 years when reward will be less than .5 BTC.

So give me sound logic  that make me believe that my assumptions are wrong.

PS: No discussion on LN here as LN do not update blockchain for every transaction.

The decentralization, BTC price and transaction costs are interlinked, and if the difficulty of mining increases, the price and transaction costs of bitcoin are likely to rise, and I do not think that all of the bitcoins can be excavated in 2046. The network will continue to run.

There are several assumptions to be made if you assume that:
1. The efficiency of ASICs and electricity fees remain constant from now till then.
2. The number of transactions per block and the price of Bitcoin remains constant.

In 2048 years, if the number of transaction has grown exponentially, I expect us to come up with a better scaling solution. With LN, the transaction has to eventually be in the blockchain. If the coins can be spent off the chain for several times, the transaction fee that the miner would get per transaction could be larger without actually increasing the actual cost per transaction.

I don't expect that the network hashrate would be anywhere near the point to which the network is susceptible to 51% attacks. Miners would most likely have ROIed and they would keep their ASICs on for as long as the revenue > cost.

There is just one feasible solution: Mass adoption.

Any fee based service will only work as it scales. Google receives pennies for advertisements but those pennies add up because of the scale of its usage. It has to be the same for bitcoin. If it becomes a medium of exchange for international movement of money then the fees paid for on-chain transaction, even if they are kept low, would be sufficient to keep the miners going.
That is why any such discussion MUST have LN. It is these second layer solutions that will take us to scale. Without scaling and mass adoption, there will still be bitcoin (with the small 'b') but no Bitcoin (with the capital 'B').  8)

As ETF said, there are certain consensus that needs to be followed which are proposed by satoshi. They are not meant to be broken and re-written. There aren't something like VB of ethereum for btc where they can move from PoW to PoS easily. Btc is purely decentralized where consensus would be changed only upon acceptance of the community.If that would have been broken, there wouldn't have been a possibility of splitting the chain which lead to the BCH fork. There were huge conflicts which occurred in BTC environment which lead to the BCH fork of having higher block size of 8mb. Hence, increasing the block reward won't happen or may happen on the contrary if almost majority who uses the currency accepts these consensus.
If the block reward has been fixed to 1btc, doesn't this increase the total supply on a longer term?

I am literally still feared of this alleged 51% attack. Bitmain is already in control of around 40-45% of total hashing rate. If in future bitmain reaches the 51%, it has a high possibility of creating a dreaded chaos in the whole crypto universe which may range from double spending to mining and acceptance of blocks.

BTC is still young and needs time to mature. Within 9 yrs of existence there has been numerous development in the btc space which makes them increasingly convincing to use along with the fiat money. While the transactions peaked, segwit was introduced which made to fill up the blocks with increasing number of transactions without disturbing the consensus. There were LN where off-chain transactions took place. Hence there would be numerous development in order to make the transactions cheaper and lot more user friendly.

Basing my assumption, increasing difficulty on the other hand, may be tackled by some future quantum computers if they exist or there would be something superior to ASIC mining etc.

The odds of that happening now are infinitesimal. Someone could fork bitcoin to fix the block reward at a minimum of 1 BTC, but it would be something that isn't bitcoin.

As others have stated above, this has been discussed ad nauseam, but in short mining fees are projected to make up the difference and cover the costs in order to avoid continual (although decreasing as a percentage) inflation that making a minimum block reward of 1 BTC would cause.

I will take a look to understand MAST but what exactly meant by "Signature Aggression" ? Are you referring to development in signature  like Segwit or  Schnorr.


Agreed , I certainly overlooked "The number of transactions per block" can be increased and I think we need to find new ways to increase transaction in block as we diminish the block rewards.

If efficient ASIC also means cheap ASIC (miners cost for hardware setup is reduced) then it is a plus point.

I do not think electricity cost will go down, on a contrary it is expected to rise to make mining more costly.

Price of Bitcoin is a two edge sword, miner will be happy to get more money and it will be act as incentive to them but for a bitcoin user it will mean  high transaction cost and there will no incentive for user to pay premium for a transaction when it can be done for free if both peer have account on same bank or bank will be doing cheaper transaction than BTC. If there is no end user to do transaction and no block rewards (or diminished blocked rewards) then what will miner earn. Actually high price of BTC  can backfire also.



In technology field I will say 9 year are not considered as young but like "Grandpa" because  sometimes technology become obsolete within a decade.
Continuous development and solving problem can give you the userbase otherwise userbase shifts rapidly to a better technology. 

Why do you assume that the cost of electricity is going to increase? Many power plants have to deal with an excess electricity which cannot be stored in the batteries - that's why electricity is cheaper at night. Also, renewable energy might become more efficient in the near future - there are already mining farms which use it and it's reasonable.

Bitmain could already control more than 51 % of the hashrate right now, because you don´t really
know who really runs the miners and the mining pools as an outsider. E.g. they could
simply let a part of their miners mine for another pool in order to disguise the total
extent of their control of the BTC hashrate.

Nonetheless, your worries are cleary unfounded. Even if they do indeed control that much of the hashrate
they are heavily incentivized to play by the rules of the Bitcoin network. No other company has an
comparable amount of money invested in this sector and they would jeopardize all of their investment
if they would damage the trust in Bitcoin and other cryptocurrencies. They have literally been printing money
for a few years and the gametheoretical incentives ensure that they will not participate in the potential
attacks that you mention.

I do not know what is is your assumption here. Almost all developing nation has electricity/power crisis. For renewable energy, even developed nation like USA have demand and supply gap.
https://www.renewableenergymagazine.com/interviews/american-renewable-electricity-the-gap-between-demand-20180116


Agreed to some extent, but if  government tries to exercise control on them and incentivized  them to attack Bitcoin?
Actulally attck in bitcoin will cause whole crytocurrency to collapse.

 But anyway my concern is that if network is sustainable on transaction fees or not?

Your statement does imply that the only incentive to use bitcoin are lower fees.
This is by far not correct. Bitcoin does have way more advantages compared to traditional banking systems. Lower fees are just one of these.

People in countries with an extremely high inflation rate prefer bitcoin over their local currency because it is less volatile. That being sad about bitcoin in the current stage just shows how small this problem is.

Quite a lot people prefer to use a pseudonymous near-instant financial system backed by math. Even if the transaction fees are higher than usual.


But this does not automatically mean that the fees per tx will rise. If LN as a 2nd layer solution gets adopted the on-chain fee tx's can be higher without really influencing the overall fees paid to make X (2 on-chain + Y off-chain) transactions.
In this case the user will pay the same, but the miner will indeed receive a higher fee (through channel funding-/closing- transactions).

Your opinion is very logical but let me state my own one:
At first bitcoin was almost unknown, as time goes, it's name spreads widely. Now we have more than 16 million coin. As time goes, block reward reduces. Mining will be profitable in any way because miners need profit. As time goes, there are more bitcoin customers, less new coin. Supply is low, demand is high so here is the time of high price to make customers and manufacturers (miners) satisfied.
There is no need of high transaction fees because of what I said previously. And if miners leave bitcoin network, it won't solve a problem believe me and no one is going on market to leave opponents alone.