Bitcoin Forum

So, at this late hour, I've decided to pose a question to the community.  

Faced with increased mining difficulty and lower payouts, will transaction fees be able to adequately incentivize the future of bitcoin mining?

We get (roughly) what we pay for. There is no 'enough' difficulty really. If there are lots of people paying fees then there will be lots of difficulty provided, if there are few fees there will be much less difficulty.

I think we are a long way from needing transaction fees to incentivize mining

Possibly, but there is always an incentive for generators to include transactions with extremely low fees and thus no incentive to pay any meaningful fees. Transaction fees will be voluntary donations. They still might be enough because everyone benefits from every donation so few donations are needed.

If nothing else, the double spend fraudsters will compete with each other to generate blocks and they will include all legitimate transaction too to claim their tiny fees.

If the arbitrary block size limit is removed, that is. If not, transactions will be very expensive and Bitcoin useless for most purposes.

If Bitcoin becomes useless why would fees remain high?

For most purposes. With the limit only a couple of thousand (high value) transactions fits in a block. Most potential transactions just can't be made.

Unless bitcoins are widely held to be valuable there won't be the possibility of thousands of high value transactions every 10 minutes. So while using the chain directly might eventually not be viable for buying a coffee that hardly means that coffee can't be denominated in bitcoins and payment settled in various non-block chain ways.

 

i'm fairy sure there is no if about it.  they just need to implement the "headers only" version of the blockchain, so that non-miners don't need to download the whole chain.  the block size limit is only there to prevent the blockchain from growing at an absurd rate (the current limit gives you a maximum of 25GB/year) and getting too large to download quickly, and it currently sits at 115MB.

Even so, we're not anywhere near hitting the current block size limit.  The average block is currently just over 1 kilobyte, and the largest block i see currently is 14K, not anywhere near the current 500 kilobyte limit.

Sure, but that is not so much Bitcoin as Bitcoin-backed something else with all the usual problems with gold-backed currencies.

I'm not so sure of that. I guess it depends what you mean by "a long way". The bounty per block will drop in less than two years, and it seems that mining is barely profitable as it is. I suspect a lot of miners will retire their machines once the bounty drops.