question!

[monstro]

My understanding is that mining is an essential function in processing the public ledger, and folk are incentivised to do this by the reward of bitcoins at periodic intervals.

My question is: When all BTC21m have been mined and released into the wild, what will incentivise folk to carry on 'mining' and verifying or processing the bitcoin public ledger?

[Kruncha]

Transaction fees are also a reward for the miners, when it reaches the 21m cap, there will be a lot more transactions = more fees for miners.

K.

[DannyHamilton]

My understanding is that mining is an essential function in processing the public ledger, and folk are incentivised to do this by the reward of bitcoins at periodic intervals.

My question is: When all BTC21m have been mined and released into the wild, what will incentivise folk to carry on 'mining' and verifying or processing the bitcoin public ledger?

Step one: Be aware that "all BTC21m won't be mined and released into the wild until approximately the year 2140.  So, while I can understand you having some concern for your children or grandchildren, I personally believe that technology will advance in the next 100 years beyond anything we can predict today.  It is really impossible to guess just what bitcoin will be like by then.

Step Two: Be aware that the miner's block reward consists of both a block subsidy (currently 25 BTC) and the transaction fees of every transaction that they add to the ledger.  Over time the block subsidy shrinks (it is cut in half approximately every 4 years) and (if it gains popularity) the value of the transaction fees increases due to more users paying fees.  Eventually the fees will be greater than the subsidy.  Perhaps at that time, we'll stop calling them "miners" and start calling them "transaction processors", but the job they'll be doing will be the same.

[monstro]

ok thanks guys, I wasn't aware of the existence of transaction fees, that would explain how an incentive can be inbuilt indefinitely!

Who would pay those transactions fees and at what stage?

[DannyHamilton]

ok thanks guys, I wasn't aware of the existence of transaction fees, that would explain how an incentive can be inbuilt indefinitely!

Who would pay those transactions fees and at what stage?

Many people pay them already.

The amount of space in a block is currently limited to 1 megabyte.  As popularity grows and the number of transactions increases, eventually there will be more transactions created in some 10 minute periods than will fit in the block created.  The protocol allows miners (or pools) to choose which transactions they will confirm in a block.  The remaining transactions have to wait until a later block.  As a miner, there is a financial incentive to choose the transactions that pay the highest fees.  Therefore those creating transactions that they want confirmed quickly will voluntarily include a transaction fee to provide the miners (or pools) an incentive to choose to confirm their transactions.  Those transactions that include low fees (or no fees) will be left unconfirmed until a later time when less transactions occur and there is extra room available in the block for them.

[monstro]

ok thanks guys, I wasn't aware of the existence of transaction fees, that would explain how an incentive can be inbuilt indefinitely!

Who would pay those transactions fees and at what stage?

Many people pay them already.

The amount of space in a block is currently limited to 1 megabyte.  As popularity grows and the number of transactions increases, eventually there will be more transactions created in some 10 minute periods than will fit in the block created.  The protocol allows miners (or pools) to choose which transactions they will confirm in a block.  The remaining transactions have to wait until a later block.  As a miner, there is a financial incentive to choose the transactions that pay the highest fees.  Therefore those creating transactions that they want confirmed quickly will voluntarily include a transaction fee to provide the miners (or pools) an incentive to choose to confirm their transactions.  Those transactions that include low fees (or no fees) will be left unconfirmed until a later time when less transactions occur and there is extra room available in the block for them.

thanks for that, yes that makes some sense to me!

[bhunt]

thank you, i was wondering the same
if i got it right, if bitcoin still exists till 2140, it won't die because their will still be blocks with no reward but only tx fees?