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Nietzsche387
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July 14, 2014, 04:57:14 AM
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Hello! Could you help me? I'm new here and I read some information about Bitcoin, but I didn't understand several aspects. In order to confirm transaction math problem should be solved. It solves every ten minutes and every ten minutes the solver gets reward. Am I right, that every 10 minutes the system is producing 25 BTC?
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Wusolini
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July 14, 2014, 05:00:15 AM
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Hello! Could you help me? I'm new here and I read some information about Bitcoin, but I didn't understand several aspects. In order to confirm transaction math problem should be solved. It solves every ten minutes and every ten minutes the solver gets reward. Am I right, that every 10 minutes the system is producing 25 BTC?
Hi
yes, it's money (bitcoin) supply. Used to be 50 BTC every 10 minutes, but this get halved roughly every 4 years.

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July 14, 2014, 05:06:09 AM
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Hi
yes, it's money (bitcoin) supply. Used to be 50 BTC every 10 minutes, but this get halved roughly every 4 years.

Thank you for your answer. But why so? Is it started to be too many BTC? Who is in charge of this reduction?
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July 14, 2014, 05:11:22 AM
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Hi
yes, it's money (bitcoin) supply. Used to be 50 BTC every 10 minutes, but this get halved roughly every 4 years.

Thank you for your answer. But why so? Is it started to be too many BTC? Who is in charge of this reduction?

Algorythm. This solves problem with money supply we know from fiat.
Anytime central bank can print as much money as they want (thats what is wrong) so they basicaly can manipulate value.

read this https://en.bitcoin.it/wiki/Controlled_supply

at the end there willl be 21 mil. bitcoins in circulation.


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July 14, 2014, 05:23:57 AM
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Please read this:

http://codinginmysleep.com/bitcoin-mining-in-plain-english/

It should answer all your questions.

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Nietzsche387
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July 14, 2014, 05:31:20 AM
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thank you!!
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July 14, 2014, 05:38:05 AM
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A lot of coin's do this.  It is good for coins value.
Nietzsche387
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July 14, 2014, 07:46:23 AM
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Please read this:

http://codinginmysleep.com/bitcoin-mining-in-plain-english/

It should answer all your questions.

But now I have one more question:) It said that one day the mining reward will cut down to zero. The fees will be the only reward and "the hope is that by that time there will be enough transactions". But what will be if not? I guess it will be unprofitable to mining, so what's the future of Bitcoin in this case?
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July 14, 2014, 08:12:11 AM
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The miners will still get paid transaction fees when all bitcoins are mined, thereny an econ incentive to mine (and confirm) remains
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July 14, 2014, 09:14:38 AM
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I remember when grand pappy used to work the bitcoin mines 16 hrs a day. he would come back covered in dust.
grand mama was furious.
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July 14, 2014, 09:39:30 AM
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Please read this:

http://codinginmysleep.com/bitcoin-mining-in-plain-english/

It should answer all your questions.

But now I have one more question:) It said that one day the mining reward will cut down to zero. The fees will be the only reward and "the hope is that by that time there will be enough transactions". But what will be if not? I guess it will be unprofitable to mining, so what's the future of Bitcoin in this case?

The last Bitcoin block that would give a reward is estimated to be mined during the year 2140. That is over a century from now. Even if the estimate is off by 50%, it would still be at least 65 years before it happens. Bitcoin will either be remarkably thriving or decidedly impractical by then. It might not even be called Bitcoin anymore. The Bitcoin network being unable to support itself with transaction fees over 100 years from now is essentially a non-issue at this point in time.
Lamigo
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July 14, 2014, 02:09:03 PM
 #12

Hello! Could you help me? I'm new here and I read some information about Bitcoin, but I didn't understand several aspects. In order to confirm transaction math problem should be solved. It solves every ten minutes and every ten minutes the solver gets reward. Am I right, that every 10 minutes the system is producing 25 BTC?

Block finding is a random process, and so we can have no blocks in an hour, or we can have 6 blocks in 10 minutes.
The mining difficulty adjusts every 2016 blocks, to bring the expected time to find block back to 10 minutes.
The current block reward is 25 btc, but it will be halved every 210000 blocks.

DannyHamilton
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July 14, 2014, 02:27:09 PM
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But now I have one more question:) It said that one day the mining reward will cut down to zero. The fees will be the only reward and "the hope is that by that time there will be enough transactions". But what will be if not? I guess it will be unprofitable to mining, so what's the future of Bitcoin in this case?

If the compensation for transaction confirming is not high enough, then people will stop mining.  If too many people stop mining, then bitcoin will become insecure.  If bitcoin becomes insecure, then people won't trust it for transactions.  If people don't trust it, then there will be no desire (demand) to have any of it.  With a fixed supply, and a dropping demand, the value will decrease.  It is possible that the whole system will completely collapse and become a failed experiment.

On the other hand, the subsidy is currently 25 BTC.  The subsidy will be 12.5 BTC every 10 minutes from the year 2016 until the year 2020.  The subsidy will be 6.25 BTC from the year 2020 until the year 2024.  The subsidy will continue to be cut in approximately half every 4 years.  It won't be 0 BTC until approximately the year 2140.  This leaves a lot of time for bitcoin to gain popularity.

Lamigo
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July 14, 2014, 02:28:12 PM
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Please read this:

http://codinginmysleep.com/bitcoin-mining-in-plain-english/

It should answer all your questions.

But now I have one more question:) It said that one day the mining reward will cut down to zero. The fees will be the only reward and "the hope is that by that time there will be enough transactions". But what will be if not? I guess it will be unprofitable to mining, so what's the future of Bitcoin in this case?

The last Bitcoin block that would give a reward is estimated to be mined during the year 2140. That is over a century from now. Even if the estimate is off by 50%, it would still be at least 65 years before it happens. Bitcoin will either be remarkably thriving or decidedly impractical by then. It might not even be called Bitcoin anymore. The Bitcoin network being unable to support itself with transaction fees over 100 years from now is essentially a non-issue at this point in time.

I think that would not be a problem

in a 100 years I guess bitcoin will be worth millions

which means that there would be hundreds, thousands of bitcoin billioners

we could create a mining service based on donations

people would mine just because they love bitcoin

this is not an issue

1 bitcoin donation aka. a million dollars would cover all this Cheesy

With a smaller and smaller block reward, the tx fee will take a larger and larger role in the mining incentives.
IMO, either the bitcoin price will go up, or the tx fee will need to go up. Smiley

Nietzsche387
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July 15, 2014, 04:00:59 AM
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If the compensation for transaction confirming is not high enough, then people will stop mining.  If too many people stop mining, then bitcoin will become insecure.  If bitcoin becomes insecure, then people won't trust it for transactions.  If people don't trust it, then there will be no desire (demand) to have any of it.  With a fixed supply, and a dropping demand, the value will decrease.  It is possible that the whole system will completely collapse and become a failed experiment.

On the other hand, the subsidy is currently 25 BTC.  The subsidy will be 12.5 BTC every 10 minutes from the year 2016 until the year 2020.  The subsidy will be 6.25 BTC from the year 2020 until the year 2024.  The subsidy will continue to be cut in approximately half every 4 years.  It won't be 0 BTC until approximately the year 2140.  This leaves a lot of time for bitcoin to gain popularity.

How did you calculate this? I mean, if

Block finding is a random process, and so we can have no blocks in an hour, or we can have 6 blocks in 10 minutes.
The mining difficulty adjusts every 2016 blocks, to bring the expected time to find block back to 10 minutes.
The current block reward is 25 btc, but it will be halved every 210000 blocks.
so, more users - more transactions - more blocks and the time till reward's cutting is reducing, or not?
DannyHamilton
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July 15, 2014, 04:11:53 AM
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If the compensation for transaction confirming is not high enough, then people will stop mining.  If too many people stop mining, then bitcoin will become insecure.  If bitcoin becomes insecure, then people won't trust it for transactions.  If people don't trust it, then there will be no desire (demand) to have any of it.  With a fixed supply, and a dropping demand, the value will decrease.  It is possible that the whole system will completely collapse and become a failed experiment.

On the other hand, the subsidy is currently 25 BTC.  The subsidy will be 12.5 BTC every 10 minutes from the year 2016 until the year 2020.  The subsidy will be 6.25 BTC from the year 2020 until the year 2024.  The subsidy will continue to be cut in approximately half every 4 years.  It won't be 0 BTC until approximately the year 2140.  This leaves a lot of time for bitcoin to gain popularity.

How did you calculate this? I mean, if

Block finding is a random process, and so we can have no blocks in an hour, or we can have 6 blocks in 10 minutes.
The mining difficulty adjusts every 2016 blocks, to bring the expected time to find block back to 10 minutes.
The current block reward is 25 btc, but it will be halved every 210000 blocks.
so, more users - more transactions - more blocks and the time till reward's cutting is reducing, or not?

The block solving process is a random process.  It is impossible to know if any particular block will be solved in the next second, or if it will take a few hours.  But this doesn't mean that probability and statistics don't apply.

If you continuously roll a six sided die, it is impossible to know if the next roll will be a 6, or if it will take a few hundred rolls until a 6 comes up.  However, you can say that "on average" a six will show up one sixth of the time.  The more rolls, the closer the real results tend towards one sixth.

The number of users and the number of transactions has no effect on the number or frequency of blocks solved.  The protocol adjusts the mining difficulty every 2016 blocks.  If it took more than 20160 minutes to solve the most recent set of 2016 blocks then the difficulty is too high, and the protocol automatically adjusts the difficulty to be easier so that blocks will be solved faster.  If it took less than 20160 minutes to solve the most recent 2016 blocks then the difficulty is too low, and the protocol automatically adjusts the difficulty to be more difficulty so that blocks will be solved slower. In this way the entire system self adjusts to keep the block solving rate close to an average of 1 block every 10 minutes.

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