This issue hadn't been addressed, please stop saying that.  It's a lie.

If it had been addressed someone would have Provided a sufficient explanation in this thread.  I have yet to see one.

Thus to me this issue is problematic for bit coin.

People assume wrongfully that inflation is bad.   To respect to security, inflation is not only beneficial but necessary.  Otherwise a declining hash will compromise the security of the network.

He exchange price is independent of security of the network?

Are you joking?  I hope so.

No that's not true.  The claim that if it becomes unprofitable mining will decrease, miners will stop, and it will become profitable again.  That's ok.  It doesn't matter.

The security of the network is determined by hash.  A decrease in mining is a decrease in hash which is a decrease in security.  If hash declines the value of bitcoins will decline.  The hash determined the value of the bitcoin, nothing else.  The hash gives the bitcoin security.

Once hash decreases value decreases.  The hash has to keep growing for value to increase.

I have to go too.  Later, no time for this.

Vladimir i'm discussing the future.

Right now the ecosystem is healthy.  An unhealthy one would be where reward stops for block generation.

This is not acceptable language.  This is your final warning.  Check yourself or I will.

-creighto

Listen, this is a serious problem.

People think it's beneficial to stop the reward for generating new blocks.  They're wrong.  They're also idiots.  Maybe they're misinformed, but it's not a good position.

NO ONE should believe this.  It's stupid.  I don't know how people came to the conclusion.

Hash secures the network and miners don't make as much money, they'll stop mining.  Once hash goes down, value of bitcoins goes down.  Bitcoins are only worth the hash of the network.  Not their supply.  It's irrelevant.  You can fix supply, but if the network is insecure, they're not worth anything.

INFLATION IS GOOD for bitcoin.  It supports the hashing network.

The reward wasn't reduced.

The hash went up, security of the network went up, price went up.  Effective reward remained the same or increased.

If hash ever falls, the network becomes prone to attack.  A strong network is one with growing hash to keep ahead of potential attackers.

Removing block generation reward may reduce the number of miners.  If that happens, bitcoins will lose value.  Not gain.

Are you really that fucking stupid?  Seriously?  You don't see the problem?  If you're that stupid i feel sorry for you.  Is it an ego thing?  I hope so.

There's a simple fix to this solution.  Don't decrease intensives for people to mine.  Once you do you compromise the network.

I don't know why you people are so hostile to this.  It should be very easy to understand.

Listen dude.

It's pretty simple.

If you remove an incentive (money) to mine, you'll decrease hash.  That's a fact.

If you decrease hash the network is less secure.  That's a fact.

Why do you want less people mining?  Mining should be rewarded because it secures the network.  If we're decreasing the average time a block is rewarded, then mining is less profitable.  We don't want that.  It's stupid.

I don't care.  This is today.  My hypothesis is for 2040.  If you don't understand this, i can't help you.

There's a reason to mine. You profit from transaction fees and new block generation reward.

IF YOU DO NOT KEEP INCREASING HASH THE NETWORK IS PRONE TO ATTACK.

That's a fact.  To claim inflation of bitcoins hurts the network is stupidity.  It creates a reason to mine.  Mining secures the network.  If you remove that reason to mine, the network will be compromised.

THE ONLY REASON BITCOINS ARE WORTH ANYTHING IS BECAUSE OF SECURITY.  If hash does not keep rising, the network will be compromised.  It's not a maybe.  It's a definite.

What the fuck?

Overprinting?  The difficulty keeps rising, the cost to generate 1 coin keeps rising.  If it didn't, then the network would be less secure.  Hash creates security.

Generating new coins CREATES SECURITY.  INFLATION in this system CREATES SECURITY.  Because it generates reward for mining.  Mining increases hash.  Hash increases security.

Why would you do someone to weaken the system?

I said it's irrelevant.

Transaction fees are 1 or 2 incomes for miners.

If you remove 1 income (block generation reward), then you decrease the profits of miners.  If you decrease a source of income, hash will likely drop.  Who cares?

If hash drops the network is less secure and prone to attack.

Reward for blocks will stop in 2040.  Yes or no?  If rewards for new blocks stop, miners will depend on transaction fees.   This decreases the revenue of the mining.  Thus mining is less profitable.  Only a fucking retard can't see this.

If mining is less profitable, hash will fall.  If hash falls the network is less secure.

Are you really having trouble understanding this?

Do you find fault in my analysis?

I will introduce the concept of Sweft's Law and Sweft Attack below.

Sweft's Law:  The network hashrate of a proof of work cryptocurrency must rise at a rate at least equal to that of Moore's Law to provide minimal network security.

Sweft Attack:  A prolonged deflationary attack on a cryptocurrency network describing a situation in which a rogue miner processes transactions solely for the purpose of removing the fee of the transaction from circulation.  A necessary precondition for said attack is that the average transaction fee must exceeds the average rate of inflation.

Edit:  Originally titled the 2040 problem, a more apt title is the deflationary problem.  I use 2040 as a point where mining reward via block reward would be negligible.  I'm starting to believe this point where miners no longer profit enough to increase hash will come much sooner, perhaps by 2020.


Edit:  An explanation of Sweft's Law for those having trouble understanding it.

Moore's Law states that the number of transistors doubles every two years.
This means two years from now, the cost of the network (hash / ($ / hash)), given equivalent hash, will be half.
And half in another two years. And half in another 4 years.
That means in 6 years it will take 1/8th the amount of capital to replicate the original hash.
Thus, the network must grow at the rate of Moore's Law to sustain the value of its hash so that the value to replicate the original hash does not decrease.
That means that the network must double its hash every two years.
Every two years there has to be a capital investment equivalent to the cost of network hash / 2 to double the hash in accordance with Sweft's Law.


Edit:  I haven't posted in two years but i will provide an updated analysis below.

For BTC to to have value, miners must secure the network. If miners do not constantly increase hash, Moore's law will catch up to the network and it will become prone to attack. This should be easily accepted as fact. If you don't accept this premise i can't possibly help you understand the deflationary flaw in bitcoin.

If you don't understand, let me try to explain it again. If hash remains constant and doesn't increase for a number of years, technological advancements (Moore's Law) will make an 51% attack more likely.

Now what some people seem to argue is that tx fees will support mining growth.

This is true in two scenarios.

1) bitcoins are sent/received more frequently (velocity) 2) tx fees increase

I will addresses the problems with both scenarios.

The problem with #2 is that there is a cap on maximum fee the miners can charge, at 100%. So velocity remains constant, miners cannot increase profit beyond 100% tx fee. So this cannot create increasing profit.

The problem with #1 is that bicoins can be permanently lost, and there is a hard cap on the amount of bitcoins. That means that there will eventually be more bitcoin lost than are generated by block reward. This should be known as the 'Sweft point' where bitcoin turns into a deflationary currency from an inflationary one. Thus, to believe that transactions will increase as coins are lost, aka deflation, is not a sound proposition.

Another issue is that rogue miners can mine the network, charging tx fees and sending the coins to the trash. This would further exaggerate the deflationary tendency of the bitcoin design.

Thus it should be obvious to anyone that understands the issues to also understand that there exists a simple solution which will make the person who implements it rich.

Make an alt currency with a cap minimum 3% inflation. This will satisfy the profits of the miners and hash of the network.


Original:

In 2040 new block generation will be negligible, bitcoins will be fixed.  Miners will only be rewarded for transaction fees.  This may not seem like a problem, it IS.

The health of the network depends on constant hash growth.  Without constant hash growth, the network is prone to attack.  Why?

What protects the network right now is a high hashing rate.  This secures it from attack.  Without this, there is no security.  The price of bitcoins would fall.  The more hash, the more security, the higher the price will be.  Because it's impenetrable from exterior forces or supercomputers.  If a government were to be able to attack the network, 99% of the network, the system would fail.  If the system has the ability to fail, the price of bitcoins is worthless.

Thus, the whole network depends on hash.  The security and price, which is also reflective of hardware and electricity, and again, security.  The more hash the network has the more secure.

Thus, miners need incentive to increase hash.  They do this by generating new coins.  Thus you increase hash and create a more secure network.

The problem is that in 2040 new block generation will be negligible, and coins will be more or less fixed.  Now, people want to make you believe this is fine.  It's not.  It's stupid and beyond stupid.

The stupid part about is is that it removes an incentive for miners to increase hash.  It removes a revenue stream for miners.  New coin production is not BAD, it's GOOD.  Only a moron would think otherwise.

This is extremely important.

When you remove the reward for generation of new blocks, you remove a revenue stream for miners, hash will fall.  You say, who cares, hash falls.  

Hash secures the network.  It ensures that miners will profit and the miners ensure there is no double spending of coins.  If miners stop mining because intensives become smaller (loss of profit), hash goes down, the network is prone to attack.

Then the coin holders will be mining to protect their own money.  This will be an incentive of the richest members.  The problem is that every year hardware advances and you're no longer making as much money mining, maybe not even to cover the hardware costs to protect the network.  So now, the network is prone to attack.

This is irrespective of assuming whether or not transaction fees will support the network.  It's irrelevant.  The network will be weaker because you removed profit from miners.  Now, miners stop mining.  Thus, you decrease hash.

Bitcoins are only worth the hash(security) of the network.


R

If someone bough something yesterday, the merchant has more money today.

Bitcoins are more deflationary than commodities like gold or silver since production ceases in bitcoins but silver and gold are still be mined.

No because gold production didn't stop.  Botcoin production will stop.  Original poster raises a valid question.  Lending would have to be at very low rates since the currency should theorhetically increase value over time.  If it increases in value over time, there's no reason to lend.  Plus,  there would be no additional bitcoins to pay off debt.  This seems problematic.