Can Bitcoin go dormant?

[chriswilmer]

So, Gavin posted on his personal blog that he thought Bitcoins could be useful even if they were primarily used for "storing value" as opposed to doing lots of transactions. I agree with Gavin on this, BUT... imagine it is 2050 and all of the Bitcoins have been mined and the only reward at this point is transaction fees... if most people are using Bitcoins just as a store of wealth, then there are very few transactions, which means there is very little reward for mining and so a lot of computers would pull out of the Bitcoin network. Would this be a problem? If large Bitcoin transactions occured sparingly in 2050 and beyond, would the Bitcoin concept still work?

[cunicula]

Bitcoin could shift to proof-of-stake if this occurs.

[adrian33]

I think Bitcoin would be a good jumping off point into new ecurrencies. There could be a fixed exchange rate with the new currency, but I haven't thought it through yet. 1 or many current bitcoin holders invent new currency, how else would they issue them?

[Mr. Coinman]

Bitcoin could shift to proof-of-stake if this occurs.

For any of those who are wondering, a proof-of-stake based altcoin is already in existence - PPCoin.

[CIYAM]

I am surprised that Gavin posted that (do you have a link to the blog entry?) - personally I think if bitcoins are only hoarded it will be the death of it (as achieving a >50% attack would become easy if mining has all but died).

Although it has been a little annoying as the blockchain bloats I think having more and more transactions is the most important thing to ensure the success of Bitcoin (at least while it remains a "proof of work" system).

[adrian33]

Although it has been a little annoying as the blockchain bloats

I am no technical expert, but as an analogy could this be a possible solution... to display the positions on a chessboard, one does not need to show all the moves made up until that point. One can just display the chessboard.

Thus as such, can't the blockchain be paused for a period of time, until a new "map" is put in place - and this could occur automatically after set periods or # of transactions - this way it never bloats and resets down close to zero.

[CIYAM]

The work on "pruning" the blockchain will pretty much achieve this affect (by only retaining "unspent" coins) although for the sake of completeness of the ledger I would think that miners and perhaps others will elect to keep the entire blockchain.

[CIYAM]

Perhaps this is the post being referred to: http://gavinthink.blogspot.be/2012/07/is-store-of-value-enough.html

Thanks for that - an interesting read.

[kokojie]

No, there's no "pure" store of value, you still need to trade it. For example gold is a store of value, but there's tons of traders and transactions in gold, and traders
still make lots of money with buy/sell spread. There will not be shortage of transactions and fees for miners.

[WikileaksDude]

No, there's no "pure" store of value, you still need to trade it. For example gold is a store of value, but there's tons of traders and transactions in gold, and traders
still make lots of money with buy/sell spread. There will not be shortage of transactions and fees for miners.

I second this. People will still have to trade.

[Pieter Wuille]

For something to be a store of value, it needs to have value.

I'm sure that without trading, exchange rate would drop very quickly...

[Come-from-Beyond]

For something to be a store of value, it needs to have value.

I'm sure that without trading, exchange rate would drop very quickly...

Thx god, we have Silk road. And will have it even in 20 years.

[evoorhees]

No, there's no "pure" store of value, you still need to trade it. For example gold is a store of value, but there's tons of traders and transactions in gold, and traders
still make lots of money with buy/sell spread. There will not be shortage of transactions and fees for miners.

I second this. People will still have to trade.

+1

[DeathAndTaxes]

1) All the coins will not be mined until 2130.  If Bitcoin gained even 1% of the marketshare of gold the nominal value of even a 0.1 BTC block reward would be significant. 

2) Even if Bitcoin is primarily used for a store of wealth there will always be those looking to trade in and out, swap stored wealth for highly liquid fiat and the reverse.  Look at gold as an example.  Almost nobody uses gold for trade but gold is traded quite heavily around the world.

3) Merged mining still remains possible and an effective method to secure alt-chains.  Transaction revenue from alt-chains is currently negligible but over a long enough timeline it is in theory possible for an alt-chain to generate more revenue than the primary chain (Bitcoin).

[FreeMoney]

I am surprised that Gavin posted that (do you have a link to the blog entry?) - personally I think if bitcoins are only hoarded it will be the death of it (as achieving a >50% attack would become easy if mining has all but died).

Although it has been a little annoying as the blockchain bloats I think having more and more transactions is the most important thing to ensure the success of Bitcoin (at least while it remains a "proof of work" system).

Stupid to think "Only hoarding" is going to happen. If there was "only hoarding" how would a 51% attack even do anything? Try to set up an attack that doesn't require trade to have happened.

[markm]

3) Merged mining still remains possible and an effective method to secure alt-chains.  Transaction revenue from alt-chains is currently negligible but over a long enough timeline it is in theory possible for an alt-chain to generate more revenue than the primary chain (Bitcoin).

A lot of miners though are apparently rejecting that revenue, apparently they think that every smidgeon of value in an altchain is somehow stolen from or undermining the value of the main chain.

It is a vicious circle too, if people don't mine them people won't push as much value through them so the rewards for mining them will be lower.

-MarkM-

[justusranvier]

"Store of value" is a misnomer unless you're talking about canned food or something similarly directly consumable.

Not even gold is a store of value. You can't hardly do anything at all with gold directly - it's only useful if somebody is willing to accept it as trade for the products and services you actually use.

When you defer consumption by accumulating currency it behaves as if you are storing value but this is only possible when there is extensive trade happening using that currency.

[Realpra]

Although it has been a little annoying as the blockchain bloats

I am no technical expert, but as an analogy could this be a possible solution... to display the positions on a chessboard, one does not need to show all the moves made up until that point. One can just display the chessboard.

This is commonly known as the "ledger solution" where a public ledger is created every 10-20 years or so.

This puts somewhat of a cap on the blockchains otherwise infinite growth.

If you also want huge tx levels light clients (electrum) or even later a "swarm client" becomes a must.


Store of value is definitely not enough, but trending towards larger transactions due to fees might happen until smarter clients have been developed.

[CIYAM]

Stupid to think "Only hoarding" is going to happen. If there was "only hoarding" how would a 51% attack even do anything? Try to set up an attack that doesn't require trade to have happened.

If no coins were being traded at all then IMO Bitcoin would have already died.

If very few tx's were taking place but blocks were still being mined for a very small coinbase amounts and very few people were bothering to mine then a >50% to prevent any tx from ever being processed could easily take place thus killing Bitcoin as you could never make a tx again.

BTW it was Gavin's blog that was musing about "only hoarding" (not my idea at all).

[Realpra]

Stupid to think "Only hoarding" is going to happen. If there was "only hoarding" how would a 51% attack even do anything? Try to set up an attack that doesn't require trade to have happened.

Well if you have zero competition you could theoretically roll back the entire blockchain by mining an entirely new chain going back to the genesis block.