Does profitability matter?

[anderxander]

Does long term profitability for mining really matter? We all know bitcoins will stop being released at some point which means at some  point just trying to add computer power to increase odds of finding coins to make money won't make sense. So what's the point? The early profitability is bait to get people started. Once bitcoins are done being released what will be the point in running miners? To make all those bitcoins you just spent thousands on mining and the transactions you are going to make with them good. By running your machine you will be protecting  your transactions and everyone else s. . This is the true value of bitcoin. The major problem to overcome for bitcoin to me is paying electric companies to power the network.

 

[rezin777]

Transaction fees will replace the block reward. Thanks for playing.

[Braden]

Current transaction fees make up an irrelevant fraction each block, and there is discussion of reducing the minimum fee in the client. I fail to see how transaction fees will be sufficient to sustain mining?

[RyNinDaCleM]

Mining will go on for quite a while! Only a 1/3 of the BTC has been found. With increasing difficulties, it has been, and will continue to take longer to solve a block. When you become severely underpowered, it becomes too inefficient to mine. Then you start buying BTC.

[rezin777]

Current transaction fees make up an irrelevant fraction each block, and the there is discussion of reducing the minimum fee in the client. I fail to see how transaction fees will be sufficient to sustain mining?

Look into your crystal ball and tell me how many transactions fees are included in the block after the first halving of the block reward.

[anewbie]

Current transaction fees make up an irrelevant fraction each block, and the there is discussion of reducing the minimum fee in the client. I fail to see how transaction fees will be sufficient to sustain mining?

The miners can decide what transactions to include in a block.  It does not appear to me that any actually do much selection.

That being said, once the number of bitcoins becomes small or non-existent for finding a block, miners will become more selective.  Some may not accept free transactions.  Others may only accept a small number.  The transaction fee will determine whether your transaction goes through or not.

[Braden]

Current transaction fees make up an irrelevant fraction each block, and the there is discussion of reducing the minimum fee in the client. I fail to see how transaction fees will be sufficient to sustain mining?

Look into your crystal ball and tell me how many transactions fees are included in the block after the first halving of the block reward.

I'm asking, not stating. Why is it assumed transaction fees will be sufficient?

[Vladimir]

I'm asking, not stating. Why is it assumed transaction fees will be sufficient?

Because free self regulating market forces will sort it out. As opposed to "some wise guy will tell us what to do".

[Braden]

I'm asking, not stating. Why is it assumed transaction fees will be sufficient?

Because free self regulating market forces will sort it out. As opposed to "some wise guy will tell us what to do".

and why is it assumed that a perfectly competitive market can price the externality of computational power properly?

[Nythain]

One could assume that as the bitcoin bounty for a solved block decreases, miners and pools will be more selective in only allowing transactions with fees to compensate. This will in turn spur more transactions with fees because people want their transactions processed as quickly as possible. Even if the fee is very small, as more people start paying them for every transaction, it should add up.

It could also be assumed that as the bounty for solved blocks decreases down to nothing, the value of the bitcoin might very well increase, a lot. At this point in time, bitcents and fractions of become more valuable, especially when you consider that there can only be ~21 million minted. The number in circulation could be assumed to be less due to wallet.dat losses and bitcoins lost to the void in rare occasions.

While 0.00001btc might not be worth much now, it could possibly be worth more than 1btc by the end of the minting process. All of this is coulds and assumes though, everything could totally crash and fail before the minting process even draws near an end. Who knows. Just throwin some logic out there.

[anderxander]

What about the fact that you must pay USD for electricity? This forever ties bitcoin to the dollar and makes the dollar the base of bitcoins.

[Braden]

Is there data available as to the rate of growth in bitcoin transactions, and percentage of those transactions that involve fees?

[KnuttyD]

What about the fact that you must pay USD for electricity? This forever ties bitcoin to the dollar and makes the dollar the base of bitcoins.

Only if you pay USD for your electricity

[anderxander]

What about the fact that you must pay USD for electricity? This forever ties bitcoin to the dollar and makes the dollar the base of bitcoins.

Only if you pay USD for your electricity

Who pays btc for their electric?

[jme621]

What about the fact that you must pay USD for electricity? This forever ties bitcoin to the dollar and makes the dollar the base of bitcoins.

Only if you pay USD for your electricity

Who pays btc for their electric?

think he was referring to those who mine and dont live in usa/usd countries, thus not paying electric in usd but their native currency and thus showing why its not tied to the dollar as stated

[Nythain]

What about the fact that you must pay USD for electricity? This forever ties bitcoin to the dollar and makes the dollar the base of bitcoins.

Only if you pay USD for your electricity

Who pays btc for their electric?

Some people pay Euros, others GBP, others Rupees, you get the point... not everyone lives in the US and not every country's currency is the USD

[rezin777]

Is there data available as to the rate of growth in bitcoin transactions, and percentage of those transactions that involve fees?

http://blockexplorer.com/

[anderxander]

What about the fact that you must pay USD for electricity? This forever ties bitcoin to the dollar and makes the dollar the base of bitcoins.

Only if you pay USD for your electricity

Who pays btc for their electric?

Some people pay Euros, others GBP, others Rupees, you get the point... not everyone lives in the US and not every country's currency is the USD

I've traveled all over the world, I understand how it works.

Let me rephrase. Who doesn't use a centralized currency to pay for electric? I think a major problem for bitcoin is the conversion to a centralized currency to pay for the electric to run the network.

 

[triforcelink]

What about the fact that you must pay USD for electricity? This forever ties bitcoin to the dollar and makes the dollar the base of bitcoins.

Only if you pay USD for your electricity

Who pays btc for their electric?

Some people pay Euros, others GBP, others Rupees, you get the point... not everyone lives in the US and not every country's currency is the USD

I've traveled all over the world, I understand how it works.

Let me rephrase. Who doesn't use a centralized currency to pay for electric? I think a major problem for bitcoin is the conversion to a centralized currency to pay for the electric to run the network.

 

well, when bitcoins become more popular and stable, maybe power companies will start accepting them and then you will be able to buy your power with some btc. If the world governments keep running their currencies into the ground, bitcoins have it made.