Bitcoin Forum
October 16, 2018, 07:09:36 AM *
News: Make sure you are not using versions of Bitcoin Core other than 0.17.0 [Torrent], 0.16.3, 0.15.2, or 0.14.3. More info.
 
   Home   Help Search Donate Login Register  
Pages: [1] 2 3 »  All
  Print  
Author Topic: The fee income is the future for bitcoin  (Read 2434 times)
johnyj
Legendary
*
Offline Offline

Activity: 1848
Merit: 1000


Beyond Imagination


View Profile
October 05, 2015, 10:15:18 PM
 #1

Imagine that in future, the transaction fee income for each block raised to 50 bitcoins, while the block reward almost decreased to zero, then every miner would become the early adopter: They can mine bitcoin exactly like early CPU miners at 50 coins per block, and if they want to accumulate coins, after 4 years they would have accumulated 50% of the total coin supply!

Technically, that scenario is not unrealistic: Given average transaction size of about 0.5 bitcoin and a transaction fee of 0.005 bitcoin (1%) is tolerable, you only need to process 10000 such transaction in each block to collect 50 bitcoins in fee, which can be filled within a 4-8 MB block, still manageable even at today's technology

This means, we can bring back the good old days of 50 bitcoins per block already in a couple of halvings!

The benefit? The miners will always redistribute the coins in bitcoin ecosystem to constantly rebalance the wealth distribution, so that centralization of wealth is prevented. At the same time, mining is a risky business, miners have to constantly striving for more efficiency to stay profitable, thus any kind of wealth concentration around miners are only temporary. They also need more incentives to keep investing in mining infrastructure

There is another even bigger benefit: This solved the biggest concern/doubt about bitcoin being a ponzi / pump and dump scheme that early adopters are riding the wave and trying to profit from the late adopters. In fact, if the block reward is 50 bitcoins or even 100 bitcoins in future, late adopters can mine more bitcoins than early adopters, thus make the whole system very long term sustainable and attractive for any participants from future

The Bitcoin network protocol was designed to be extremely flexible. It can be used to create timed transactions, escrow transactions, multi-signature transactions, etc. The current features of the client only hint at what will be possible in the future.
Advertised sites are not endorsed by the Bitcoin Forum. They may be unsafe, untrustworthy, or illegal in your jurisdiction. Advertise here.
1539673776
Hero Member
*
Offline Offline

Posts: 1539673776

View Profile Personal Message (Offline)

Ignore
1539673776
Reply with quote  #2

1539673776
Report to moderator
1539673776
Hero Member
*
Offline Offline

Posts: 1539673776

View Profile Personal Message (Offline)

Ignore
1539673776
Reply with quote  #2

1539673776
Report to moderator
Preen
Full Member
***
Offline Offline

Activity: 131
Merit: 100


View Profile
October 05, 2015, 10:29:39 PM
 #2

Miners aren't going to just dish out coins, especially given their scarcity at that point. Your logic doesn't convince me.
ajareselde
Legendary
*
Offline Offline

Activity: 1708
Merit: 1000

Satoshi is rolling in his grave. #bitcoin


View Profile
October 05, 2015, 10:36:12 PM
 #3

As time passes by, with bigger and bigger blocks (hopefully), more and more transactions will fit into a single block, reducing the need for high fees (or at all?!)
I do not see nor want a future where miners have such power as u describe, it's counter productive imho; not the way it was created to be
johnyj
Legendary
*
Offline Offline

Activity: 1848
Merit: 1000


Beyond Imagination


View Profile
October 05, 2015, 10:49:41 PM
 #4

As time passes by, with bigger and bigger blocks (hopefully), more and more transactions will fit into a single block, reducing the need for high fees (or at all?!)
I do not see nor want a future where miners have such power as u describe, it's counter productive imho; not the way it was created to be

The fee, although small from individual transaction point of view, is huge from all the transactions combined point of view. Imagine that average transction is 0.5 btc, and every one is totally fine with 0.2% of fee, and a large block in future can handle 100000 transactions per block, then the fee collected by miners per block will be 100 bitcoins, is there any problem?

The biggest benefit of bitcoin monetary system is total limited money supply. This character will never change even the miners are collecting more fees. Satoshi has indicated that in future mining fee will replace the block reward, but he never said the fee should be lower than block reward, maybe he has envisioned a future of 100+ bitcoins per block fee

johnyj
Legendary
*
Offline Offline

Activity: 1848
Merit: 1000


Beyond Imagination


View Profile
October 05, 2015, 10:55:18 PM
 #5

Miners aren't going to just dish out coins, especially given their scarcity at that point. Your logic doesn't convince me.

Miners have a huge cost, if they collect 100 coins fee in each block, they might have spent 90 coins in infrastructure/management/electricity. In fact, miners might raise the fee to compensate for their income if the bitcoin price is not improving, this can be market based behavior

findftp
Legendary
*
Offline Offline

Activity: 1008
Merit: 1000


Delusional crypto obsessionist


View Profile
October 05, 2015, 11:02:27 PM
 #6

By the time that happens, there will be no single miner able to mine the block alone and collect the 50 BTC fee reward.
Your logic doesn't take the increase in adoption into account.

1FdwDuV2qgsw2w1Lza8nsea7L6mQxsc7g3
brg444
Hero Member
*****
Offline Offline

Activity: 644
Merit: 500

Bitcoin replaces central, not commercial, banks


View Profile
October 05, 2015, 11:17:23 PM
 #7

By the time that happens, there will be no single miner able to mine the block alone and collect the 50 BTC fee reward.
Your logic doesn't take the increase in adoption into account.

 Huh

Explain.

"I believe this will be the ultimate fate of Bitcoin, to be the "high-powered money" that serves as a reserve currency for banks that issue their own digital cash." Hal Finney, Dec. 2010
findftp
Legendary
*
Offline Offline

Activity: 1008
Merit: 1000


Delusional crypto obsessionist


View Profile
October 05, 2015, 11:25:57 PM
 #8

By the time that happens, there will be no single miner able to mine the block alone and collect the 50 BTC fee reward.
Your logic doesn't take the increase in adoption into account.

 Huh

Explain.

Imagine that in future, the transaction fee income for each block raised to 50 bitcoins, while the block reward almost decreased to zero, then every miner would become the early adopter: They can mine bitcoin exactly like early CPU miners at 50 coins per block

Even when fee reward is 50 BTC, there no single miner who can earn it.
In the early days, you could mine blocks yourself, but with 50BTC fee reward in the year 2140 it will all be done by pools.



1FdwDuV2qgsw2w1Lza8nsea7L6mQxsc7g3
ajareselde
Legendary
*
Offline Offline

Activity: 1708
Merit: 1000

Satoshi is rolling in his grave. #bitcoin


View Profile
October 05, 2015, 11:28:33 PM
 #9

By the time that happens, there will be no single miner able to mine the block alone and collect the 50 BTC fee reward.
Your logic doesn't take the increase in adoption into account.

 Huh

Explain.

He was probably referring to big farm operations that exist now, but wither way, they could just create a pool of such farms and split the profit anyways.
It's not the "who" will/could of get such high block fee's reward, it's the amount that shouldn't even be considered possible due to high potential of influencing natural development of
bitcoin as it was designed.
brg444
Hero Member
*****
Offline Offline

Activity: 644
Merit: 500

Bitcoin replaces central, not commercial, banks


View Profile
October 05, 2015, 11:33:18 PM
 #10

By the time that happens, there will be no single miner able to mine the block alone and collect the 50 BTC fee reward.
Your logic doesn't take the increase in adoption into account.

 Huh

Explain.

Imagine that in future, the transaction fee income for each block raised to 50 bitcoins, while the block reward almost decreased to zero, then every miner would become the early adopter: They can mine bitcoin exactly like early CPU miners at 50 coins per block

Even when fee reward is 50 BTC, there no single miner who can earn it.
In the early days, you could mine blocks yourself, but with 50BTC fee reward in the year 2140 it will all be done by pools.

Large industrial miners are solving blocks alone everyday. What is this sorcery you speak of?

"I believe this will be the ultimate fate of Bitcoin, to be the "high-powered money" that serves as a reserve currency for banks that issue their own digital cash." Hal Finney, Dec. 2010
findftp
Legendary
*
Offline Offline

Activity: 1008
Merit: 1000


Delusional crypto obsessionist


View Profile
October 05, 2015, 11:46:04 PM
 #11

By the time that happens, there will be no single miner able to mine the block alone and collect the 50 BTC fee reward.
Your logic doesn't take the increase in adoption into account.

 Huh

Explain.

Imagine that in future, the transaction fee income for each block raised to 50 bitcoins, while the block reward almost decreased to zero, then every miner would become the early adopter: They can mine bitcoin exactly like early CPU miners at 50 coins per block

Even when fee reward is 50 BTC, there no single miner who can earn it.
In the early days, you could mine blocks yourself, but with 50BTC fee reward in the year 2140 it will all be done by pools.

Large industrial miners are solving blocks alone everyday. What is this sorcery you speak of?

There is a difference in CPU miner run by one person and a mining farm ran by a company or pool of individuals.
You cannot say mining will be as easy for one person as it was 6 years ago.

1FdwDuV2qgsw2w1Lza8nsea7L6mQxsc7g3
brg444
Hero Member
*****
Offline Offline

Activity: 644
Merit: 500

Bitcoin replaces central, not commercial, banks


View Profile
October 05, 2015, 11:52:16 PM
 #12

By the time that happens, there will be no single miner able to mine the block alone and collect the 50 BTC fee reward.
Your logic doesn't take the increase in adoption into account.

 Huh

Explain.

Imagine that in future, the transaction fee income for each block raised to 50 bitcoins, while the block reward almost decreased to zero, then every miner would become the early adopter: They can mine bitcoin exactly like early CPU miners at 50 coins per block

Even when fee reward is 50 BTC, there no single miner who can earn it.
In the early days, you could mine blocks yourself, but with 50BTC fee reward in the year 2140 it will all be done by pools.

Large industrial miners are solving blocks alone everyday. What is this sorcery you speak of?

There is a difference in CPU miner run by one person and a mining farm ran by a company or pool of individuals.
You cannot say mining will be as easy for one person as it was 6 years ago.

There is no difference. It is effectively 1 mining entity.

Anyway this is beside the point which really was that subsidy would return to 50 BTC.

"I believe this will be the ultimate fate of Bitcoin, to be the "high-powered money" that serves as a reserve currency for banks that issue their own digital cash." Hal Finney, Dec. 2010
johnyj
Legendary
*
Offline Offline

Activity: 1848
Merit: 1000


Beyond Imagination


View Profile
October 06, 2015, 12:21:57 AM
 #13

More about miners' motivation:

If you are an industry miner, you would like to grab significant share of the total amount of bitcoin, in order to benefit from the growth of this decentralized financial system. It is quite similar to investing in a company's stock, a larger share of stock will give larger benefits to the stock holder. But the block reward halving every 4 years put bigger and bigger pressure on miners so that they can not get enough amount of share later on

Imagine a group of powerful enterprises researched about bitcoin later and discovered that 75% of coins are already digged out and there is no way to get significant fee from processing transactions. They might just turn around and never look back, because even if they command all the hash power in the world, they would still mine maximum 25% of all the coins, just maintain the network for early adopters, that is not attractive at all

However, if they discovered that miners could now receive 50 bitcoin fee per block, then if they command all the hash power, they would be able to mine 50% of the coins in just 4 years! This ability to turn around wealth distribution table sounds extremely attractive and democratic, they would gladly join the mining industry, deploy high efficiency mining farms and become part of the ecosystem

Of course 50 bitcoin is a bit exaggerated, but 25 would still make it very attractive: In 4 years miners could get 25% of the whole bitcoin money supply, especially it will be extremely expensive if you want to buy 25% of the bitcoins from open market

Bitcoin's success rely on no barrier of entry, it should have total free entry for everyone, no technical,monetary or political barrier. Block reward halving created a monetary barrier of entry (so called early adopters advantage, the same barrier exists for land/gold/stocks etc... ) The fee is a way to remove this barrier

johnyj
Legendary
*
Offline Offline

Activity: 1848
Merit: 1000


Beyond Imagination


View Profile
October 06, 2015, 03:03:54 PM
 #14

Ironically, the only detailed analysis of bitcoin transaction value distribution is from a 2014 paper by Federal Reserve, it seems central banks really have the over view  Grin

http://www.federalreserve.gov/econresdata/feds/2014/files/2014104pap.pdf



This statistic is from 2014, and if you look at www.bitcoinmonitor.com or www.bitlisten.com, it seems majority of the transaction value is now above 0.1 bitcoin

n2004al
Legendary
*
Offline Offline

Activity: 1050
Merit: 1000


View Profile
October 06, 2015, 03:16:49 PM
 #15

Imagine that in future, the transaction fee income for each block raised to 50 bitcoins, while the block reward almost decreased to zero, then every miner would become the early adopter: They can mine bitcoin exactly like early CPU miners at 50 coins per block, and if they want to accumulate coins, after 4 years they would have accumulated 50% of the total coin supply!

Technically, that scenario is not unrealistic: Given average transaction size of about 0.5 bitcoin and a transaction fee of 0.005 bitcoin (1%) is tolerable, you only need to process 10000 such transaction in each block to collect 50 bitcoins in fee, which can be filled within a 4-8 MB block, still manageable even at today's technology

This means, we can bring back the good old days of 50 bitcoins per block already in a couple of halvings!

The benefit? The miners will always redistribute the coins in bitcoin ecosystem to constantly rebalance the wealth distribution, so that centralization of wealth is prevented. At the same time, mining is a risky business, miners have to constantly striving for more efficiency to stay profitable, thus any kind of wealth concentration around miners are only temporary. They also need more incentives to keep investing in mining infrastructure

There is another even bigger benefit: This solved the biggest concern/doubt about bitcoin being a ponzi / pump and dump scheme that early adopters are riding the wave and trying to profit from the late adopters. In fact, if the block reward is 50 bitcoins or even 100 bitcoins in future, late adopters can mine more bitcoins than early adopters, thus make the whole system very long term sustainable and attractive for any participants from future

If you are talking about of every transaction this mean that this fee must be applied even when someone will send bitcoins or use bitcoins to buy something. If this is the meaning of your reasoning this fee will be the dead of bitcoin. No one will use it because of it. So, I want to send 1 bitcoin and must pay other 50 as a fee? No way. Then this kind of fees are being decreased from the beginnings times and increasing.
johnyj
Legendary
*
Offline Offline

Activity: 1848
Merit: 1000


Beyond Imagination


View Profile
October 06, 2015, 04:19:06 PM
 #16


If you are talking about of every transaction this mean that this fee must be applied even when someone will send bitcoins or use bitcoins to buy something. If this is the meaning of your reasoning this fee will be the dead of bitcoin. No one will use it because of it. So, I want to send 1 bitcoin and must pay other 50 as a fee? No way. Then this kind of fees are being decreased from the beginnings times and increasing.

It is the fee for every block, and there can be thousands of transactions in each block (today it is about 1000, thus the fee per transaction will be 50/1000=0.05 bitcoin, a bit high when you are sending 1 bitcoin, but still manageable)

Bitcoin's fee is fixed per transaction regardless of transacted amounts, this greatly benefit the rich people who are doing large transactions while punish the micro transactions, this is good mechanism to reduce blockchain spam, but still not a balanced design suits human behavior: Human normally don't care about the fee less than 1%, regardless of transacted amount. From network point of view, the cost is bandwidth and CPU time, so it can only be set on size of transaction data

n2004al
Legendary
*
Offline Offline

Activity: 1050
Merit: 1000


View Profile
October 06, 2015, 04:47:19 PM
 #17


If you are talking about of every transaction this mean that this fee must be applied even when someone will send bitcoins or use bitcoins to buy something. If this is the meaning of your reasoning this fee will be the dead of bitcoin. No one will use it because of it. So, I want to send 1 bitcoin and must pay other 50 as a fee? No way. Then this kind of fees are being decreased from the beginnings times and increasing.

It is the fee for every block, and there can be thousands of transactions in each block (today it is about 1000, thus the fee per transaction will be 50/1000=0.05 bitcoin, a bit high when you are sending 1 bitcoin, but still manageable)

Bitcoin's fee is fixed per transaction regardless of transacted amounts, this greatly benefit the rich people who are doing large transactions while punish the micro transactions, this is good mechanism to reduce blockchain spam, but still not a balanced design suits human behavior: Human normally don't care about the fee less than 1%, regardless of transacted amount. From network point of view, the cost is bandwidth and CPU time, so it can only be set on size of transaction data


I know this but the tendency of this fee in time (if I'm not wrong) it is the decreasing and not the increasing as you propose. I remind that three years ago was much high than today's days. Your propose is in the the opposite. You think that your proposition have future?
bambou
Sr. Member
****
Offline Offline

Activity: 346
Merit: 250


View Profile
October 06, 2015, 05:25:39 PM
 #18

Rewarding the miners for their POW verification ensures the network's security.

Considering that the block reward will halve until it reaches 0, a fee market shall emerge naturally to sustain the system.



Non inultus premor
johnyj
Legendary
*
Offline Offline

Activity: 1848
Merit: 1000


Beyond Imagination


View Profile
October 07, 2015, 05:03:39 AM
 #19


I know this but the tendency of this fee in time (if I'm not wrong) it is the decreasing and not the increasing as you propose. I remind that three years ago was much high than today's days. Your propose is in the the opposite. You think that your proposition have future?

That's a very large topic, I will go for sleep now and analyze that later  Smiley

Peter R
Legendary
*
Offline Offline

Activity: 1162
Merit: 1007



View Profile
October 07, 2015, 05:22:53 AM
 #20

Imagine that average transction is 0.5 btc, and every one is totally fine with 0.2% of fee, and a large block in future can handle 100000 transactions per block, then the fee collected by miners per block will be 100 bitcoins, is there any problem?

Are you suggesting that I'd pay $20 to move $10,000, and only $0.002 to move $1? 

The problem I see with this is that I suspect it won't be possible to enforce this 0.2% fee structure.  The reason is that from the miner's perspective, it costs him the same amount to produce a kilobyte of block space whether he uses it to record the $10,000 transfer or the $1 transfer.  This means that a miner would make a huge profit on the large transfer and perhaps even lose money on the small transfer.  How would you stop miners from undercutting each other?  For example, I would be happy to include the $10,000 transaction in my block for $10 (rather than $20) because my profit margin for that TX would still be huge. 


Run Bitcoin Unlimited (www.bitcoinunlimited.info)
Pages: [1] 2 3 »  All
  Print  
 
Jump to:  

Sponsored by , a Bitcoin-accepting VPN.
Powered by MySQL Powered by PHP Powered by SMF 1.1.19 | SMF © 2006-2009, Simple Machines Valid XHTML 1.0! Valid CSS!