Other factors of generating coins

[sniperx]

Hello there,

I've been watching bitcoins for the past year and honestly there significant increase in the market capital which is really promising, but i've a couple of questions regarding the new miners hitting the market soon,
1- All the talks are about hashrate that mainly affects the processes of generating bitcoins, but i think there are other factors, is this true? what are they?
2- Current block earns you 25bitcoins previously was 50bitcoins is this going to decrease with the next difficulty shift? or when exactly the amount of bitcoins earned per block is decreased?
3- Let's say i've a big amount of bitcoins how easy it's to cash them for dollars or euros?

Thanks in advance  .

[Stephen Gornick]

1- All the talks are about hashrate that mainly affects the processes of generating bitcoins, but i think there are other factors, is this true?

Hashing is the work performed for Bitcoin's distributed consensus approach.  It only receives bitcoins as a subsidy.  The amount of the subsidy is decreasing slowing and eventually end completely.  But the hashing needs to continue, so transaction fees will need to enter the scene as the subsidy decreases.

2- Current block earns you 25bitcoins previously was 50bitcoins is this going to decrease with the next difficulty shift? or when exactly the amount of bitcoins earned per block is decreased?

The first drop, from 50 to 25 BTC occurred with block 210,000 in November 2012 (nearly four years since block 0).  The next drop from 25 to 12.5 BTC will occur with block 420,000, expected around October 2016 (nearly four years since block 210,000),  And repeat with the block reward subsidy dropping in half every four years.

3- Let's say i've a big amount of bitcoins how easy it's to cash them for dollars or euros?

What is "big amount"?  If you are in the U.S. you can sell up to 100 BTC today using Coinbase and have the cash in your bank account in a few days.  Larger amounts after a probationary waiting period.   Otherwise you can cash out larger amounts at exchanges, like Bitstamp, Mt. Gox, etc.  For really large amounts there are bulk buyers and sellers who can help accommodate your need.

 - http://en.bitcoin.it/wiki/Selling_bitcoins

[sniperx]

Firs of all thank you for clarification.

The first drop, from 50 to 25 BTC occurred with block 210,000 in November 2012 (nearly four years since block 0).  The next drop from 25 to 12.5 BTC will occur with block 420,000, expected around October 2016 (nearly four years since block 210,000),  And repeat with the block reward subsidy dropping in half every four years.

October 2016, from what i read the drop expected to be within this year but i still see it's a long run to reach 420k, i think the new mining rigs will affect the speed of this drop.

Also current bitcoins generated "10,828,500" this means we are half way, is the transaction fee planned to be applied after earning coins will stop or this is just a suggestion, if there's no transaction fees or other source of income this will break the whole system.

Thank you again.

[DannyHamilton]

i think the new mining rigs will affect the speed of this drop.

Not by much.  The bitcoin protocol automatically adjusts the difficulty every 2016 blocks to try and keep the block creation rate close to an average of 10 minutes per block.  Faster rigs don't speed up the block generation much, they jsut increase the difficulty.

the transaction fee planned to be applied after earning coins will stop or this is just a suggestion, if there's no transaction fees or other source of income this will break the whole system.

Transaction fees are voluntary, but miners don't have to include transactions that don't have a fee if they don't want to (inclusion of transactions in a block is a voluntary decision of the miner or pool).  So as the subsidy decreases, miners will begin being more selective about which transactions they include in a block.  If you don't want to wait a really long time for your transaction to be confirmed, you'll have to voluntarily pay a fee.