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Author Topic: Isnt bitcoin fundamentally unsusteainable!?  (Read 1440 times)
ZomZilla
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January 12, 2013, 05:40:33 PM
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There will be a point in the (far) future where the last block is mined. when this is done, there will be NO incentive for people to mine at all.

the way I understand it the bitcoin system depends on mining in order to function, so doesnt this mean that as soon as that last block is mined (or even as soon as there are too few for profitable mining) it has signalled the death of the bitcoin?

even if people mine out of good will and transactions can still happen (i am not sure, but dont transactions depend on new blocks?)
then there will be no need for innovation (like the fabled ASICs which may or may not arrive), and the whole system will weaken massively

and if this is true, how can bitcoin expect to acheive its aims if it has an expiration date?


If I am wrong (likely) then please explain why; I am here to learn

Thanks in advance

Zomzilla

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Akka
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January 12, 2013, 05:56:23 PM
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There will be a point in the (far) future where the last block is mined. when this is done, there will be NO incentive for people to mine at all.

There is no last block. As long as people mine, there will always be new blocks.

If you mean the reward. If the reward becomes 0, there are still the transaction fees. And if that is unprofitable, than miners will drop out and the difficult will adjust itself until it's again profitable. If no one would be mining the difficult would be so low, that you could mine on you Phone.

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DeathAndTaxes
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January 12, 2013, 05:57:32 PM
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Transaction fees.  Fees as a % of total miner compensation have already risen from 0.0% to ~1% to 2% of miner total compensation.
ZomZilla
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January 12, 2013, 06:08:23 PM
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AAh

I didnt realise that it was the reward that ended; that makes much more sense


as for the transaction fees; to what sort of level will they rise do you think?

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January 12, 2013, 06:34:34 PM
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I didnt realise that it was the reward that ended
if bitcoin is really effective and takes up, we'll come up with a patch in the next 40 years to increase the digits and postpone this. i.e. it will be very small, but never nothing
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as for the transaction fees; to what sort of level will they rise do you think?
0.1% of the median value of tx in the last 2000 blocks. +/- 0.09 :-)
ZomZilla
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January 12, 2013, 08:38:11 PM
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Thanks for all the info guys Smiley

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DannyHamilton
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January 13, 2013, 05:01:30 PM
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if bitcoin is really effective and takes up, we'll come up with a patch in the next 40 years to increase the digits and postpone this. i.e. it will be very small, but never nothing
It is extremely unlikely that the block subsidy (and therefore minting of new coins) will be modified.  It would require that EVERY user of bitcoin agree to it, and since there isn't a need for it I don't see it happening.  It will be over 130 years before the block subsidy drops to 0. The plan is for transaction fees (or other miner compensation) to eventually replace the subsidy.

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as for the transaction fees; to what sort of level will they rise do you think?
0.1% of the median value of tx in the last 2000 blocks. +/- 0.09 :-)
Impossible to predict.  It depends on the growth of bitcoin, and on the future increases in maximum block size.

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January 15, 2013, 04:32:29 AM
 #8

Bitcoin is completely sustainable.

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January 15, 2013, 05:55:24 AM
 #9

It will be over 130 years before the block subsidy drops to 0.

even after it has dropped to 0 (when truncated to 8 decimal places), it could subsequently become non-zero again if more than 8 decimal places are used.

eg. 0.00000000582076609134674072265625 is currently truncated to 0, but later, someone might earn that amount as a block subsidy.
DannyHamilton
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January 15, 2013, 02:41:23 PM
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It will be over 130 years before the block subsidy drops to 0.

even after it has dropped to 0 (when truncated to 8 decimal places), it could subsequently become non-zero again if more than 8 decimal places are used.

eg. 0.00000000582076609134674072265625 is currently truncated to 0, but later, someone might earn that amount as a block subsidy.

While I'll concede that such a change might perhaps be possible, I believe it to be highly unlikely.

It would require that EVERY user of bitcoin agree to the change.  There are just too many people who will be against it.  Such a change would result in a split blockchain.  Those on the old blockchain will continue to call their system Bitcoin.  Those on the new system can either create confusion by trying to call their system Bitcoin as well, or they can come up with a new name.

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January 15, 2013, 03:32:00 PM
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It will be over 130 years before the block subsidy drops to 0.

even after it has dropped to 0 (when truncated to 8 decimal places), it could subsequently become non-zero again if more than 8 decimal places are used.

eg. 0.00000000582076609134674072265625 is currently truncated to 0, but later, someone might earn that amount as a block subsidy.

While I'll concede that such a change might perhaps be possible, I believe it to be highly unlikely.

It would require that EVERY user of bitcoin agree to the change.  There are just too many people who will be against it.  Such a change would result in a split blockchain.  Those on the old blockchain will continue to call their system Bitcoin.  Those on the new system can either create confusion by trying to call their system Bitcoin as well, or they can come up with a new name.

Well I cant see any reason why somone would not want to accept  such minor ingerention in bitcoin protocol. It does not change idea of bitcoin economy by any mean, its just precision increase. Altough it would be one way migration, im sure over 99% of users would agree if it was really nesesery. Rest would be left with their own blckchain until they will decide to switch.
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January 15, 2013, 03:48:44 PM
 #12

Your assumption that 99% will agree it probably naive.  99% of users haven't ever agreed on anything.  Even less controversial proposals have met significant resistance (search the forum on P2SH approval).

* Increasing the precision increases the risk of some implementation error in one or more clients that results in forks.
* Increasing the precision is likely of dubious value.  Even with a money supply where 1 BTC = $1M USD 1 satoshi = $0.01 USD.  
* As transaction fees becomes more important to Bitcoin the cost (even if small relative to other methods) of a transaction will probably make ultra-micro transactions (hundredth to thousands of US penny for example) cost prohibitive.   Realistically the min viable tx size is probably 20x to 50x the size of the minimum viable fee.  Having a precision significantly beyond the min realistic transaction size doesn't produce any value/utility. 
* The potential subsidy available from all the unminted coins is a rounding error and even at extreme valuations doesn't produce any meaningful amount of revenue for miners.  At 1 BTC = $1M USD increasing precision would make the first "zero subsidy" block worth an additional half cent (US circa 2012).  Over time even that negligible amount will decay to nothing.
* Higher precision either requires a larger (bit size) transactions (and the corresponding storage/bandwidth/cpu costs) or it will require switching to a rational decimal representation which adds complexity over the simple unsigned integer system used now.

There is no change that has zero cost or risk.   There are always costs and potential consequences.  Any hard fork core protocol change has to warrant the cost.   I see none for increased precision.  Personally I wouldn't favor a change unless there was a compelling reason.  Simply changing it for the purpose of changing it is unlikely to reach a consensus.
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January 15, 2013, 05:30:34 PM
 #13

* The subsidy amount from the remaining unminted coins is a rounding error and even at extreme valuations doesn't produce any meaningful amount of revenue for miners.  At 1 BTC = $1M USD increasing precision would make the first "zero subsidy" block a 0.5 cent (US cent circa 2012) subsidy instead and over time that would also decay.
* Higher precision either requires a larger (bit size) transaction or it requires more complex rational decimal representation which adds complexity over the simple unsigned integer system used now.

Good point, the latter outweighs the former, unless we use a rate of 1 BTC = $1B USD, then your zero subsidy block is a whopping $5.

That's a cup of coffee right there.
DannyHamilton
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January 15, 2013, 06:21:59 PM
 #14

Good point, the latter outweighs the former, unless we use a rate of 1 BTC = $1B USD, then your zero subsidy block is a whopping $5.

That's a cup of coffee right there.
Except that by the time that 1 BTC = 1 billion USD, it is entirely possible that that inflation will have driven the price of a cup of coffee beyond $500.

$5 might be a cup of coffee today, but 1 BTC != 1 billion USD today.  After that much inflation, $5 may be as useless as $0.01 is today.

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