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Author Topic: The mining reward is less with every new block, actually  (Read 1677 times)
remotemass
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March 24, 2013, 05:35:20 AM
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If you see coins as ownership in the bitcoin network, enabling you to harness more power out of it, you can notice that the percentage of ownership that you earn with a mining reward is equal to: number of coins rewarded over the number of coins in circulation at that moment.
The mining reward is now of 25 BTC, roughly every ten minutes or so, but notice that the amount of coins in circulation is increasing with every reward, so if you see reward as such a percentage of ownership, you can see that the reward is actually decreasing with every reward, and not only every four years.
At the same time the bitcoin network is increasingly more valuable and useful, making the power you can harness with it with less percentage of it as such, compensate, as the network and usage of it scales.

Would be great there was a torrent file of all referenced materials of the paper: "How to Build Time-Lock Encryption" by Tibor Jager. And having its magnet link published on bitcoin blockchain!
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bg002h
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March 24, 2013, 11:16:12 AM
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It's called inflation. It's meant to help people want to spend their coins.

Hardfork aren't that hard.
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gendal
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March 24, 2013, 11:21:22 AM
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you can see that the reward is actually decreasing with every reward, and not only every four years.

Not really.  The rate of production is known in advance by everybody who participates.  So this predictable inflation in the supply of BTC can be factored in to everybody's assessment of the value of the currency.   The perceived value of the "earlier" coins already takes into account the expected future production.

Moreover, BTC is fungible:  the 25BTC reward you get for your block is indistinguishable (for all intents and purposes) to the 25BTC that the miner of the previous block earned.  If your BTC are somehow worth less, then so are his.

coastermonger
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March 24, 2013, 05:06:03 PM
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Quote
(number of coins rewarded)/(the number of coins in circulation at that moment)

This is your equation

(Block reward + Transaction Fee Reward)/(the number of coins in circulation at that moment)*(The purchasing power of those coins)

If you're talking about rewards, This is what your equation should be

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remotemass
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March 24, 2013, 08:38:47 PM
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(Block reward + Transaction Fee Reward)/(the number of coins in circulation at that moment)*(The purchasing power of those coins)

I think you mean:
(Block reward + Transaction Fee Reward)/(the number of coins in circulation at that moment)*(Bitcoin market cap)

Would be great there was a torrent file of all referenced materials of the paper: "How to Build Time-Lock Encryption" by Tibor Jager. And having its magnet link published on bitcoin blockchain!
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