21 million limit Armageddon?

[AndBobsYourUncle]

Please forgive me if is has been answered elsewhere, but I've been searching the Internets for an answer and haven't found one.

So, there's this limit of 21M BTC, as the reward slowly shrinks for finding new blocks.

When this happens to a point where miners no longer get a reward to mine new blocks, then the hashing power of the network will fall, correct?

If that happens, then the security of the system is compromised, right? So, if the network is modified to reward nodes with transaction fees instead, then where is the incentive to mine new blocks? Are new blocks needed to make transactions, or can nodes relay transactions without new blocks?

If new blocks aren't needed to make transactions, then wouldn't it all just result in a bunch of "lazy nodes" looking for transaction fees, and not generating new blocks? Does that result in a compromise in security?

If this is all true, then why is everyone still buying BTC? I'm confused here... please help. I'm a newbie, as you can tell.

[yogi]

If new blocks aren't needed to make transactions, then wouldn't it all just result in a bunch of "lazy nodes" looking for transaction fees, and not generating new blocks? Does that result in a compromise in security?

The miner must solve the block to claim the transaction fee.

[AndBobsYourUncle]

If new blocks aren't needed to make transactions, then wouldn't it all just result in a bunch of "lazy nodes" looking for transaction fees, and not generating new blocks? Does that result in a compromise in security?

The miner must solve the block to claim the transaction fee.

Whew... That's good to know.

However, what happens to transactions that don't have a high-enough fee attached to them? What incentive would the miners have to include them?

Let's say that a large miner with a high hash rate started to only accept transactions into a block if there was a fee above a certain limit. Wouldn't that result in tons of transactions not being handled because miners would refuse to process them?

[yogi]

Let's say that a large miner with a high hash rate started to only accept transactions into a block if there was a fee above a certain limit. Wouldn't that result in tons of transactions not being handled because miners would refuse to process them?

Yes, it's essentially a free market for block-space, if there are other transactions with a higher fee than yours then they will be included first.

[DeathAndTaxes]

Let's say that a large miner with a high hash rate started to only accept transactions into a block if there was a fee above a certain limit. Wouldn't that result in tons of transactions not being handled because miners would refuse to process them?

What if a large cab company in NY only accepted fares which paid $2 per block but you wanted to pay the cab driver 1 piece of lint per mile.  Wouldn't that result in a lot of people having to walk?

Hint: people could just pay more in fees.

[Aahzman]

Please forgive me if is has been answered elsewhere, but I've been searching the Internets for an answer and haven't found one.

You must not have searched very hard. This question comes up at least twice a day here.

[Anillos]

IMHO we should talk about "chain generation additional subsidy", not "mining", because It's confusing people.

[AndBobsYourUncle]

Let's say that a large miner with a high hash rate started to only accept transactions into a block if there was a fee above a certain limit. Wouldn't that result in tons of transactions not being handled because miners would refuse to process them?

Yes, it's essentially a free market for block-space, if there are other transactions with a higher fee than yours then they will be included first.

Then what's to prevent a 51% attack by offering nodes with no fees?

[AndBobsYourUncle]

Fees or not fees, they still have to provide proof of work to solve the block. If they are benevolent enough to do it for free, great for all the people that want free money transfers.

Doesn't perceived benevolency always come before tyranny?

[Mike Christ]

Fees or not fees, they still have to provide proof of work to solve the block. If they are benevolent enough to do it for free, great for all the people that want free money transfers.

Doesn't perceived benevolency always come before tyranny?

That's an interesting point  But even if over 51% of the "benevolent miners" banned together to attempt to cripple the network, it would still be extremely difficult and costly and time-consuming.

[AndBobsYourUncle]

Whether they are benevolent or not is irrelevant. Charging no fees does not replace necessity to solve the hash.

Benevolency (as an overall aspect of the network) is what bitcoin, in my opinion, had in favor of it.

The fact that there would never exist a majority control, at any point, was the allure. If, at some time in the future, an acceptance of a benevolent master node would be equivalent to giving acceptance to a perceived benevolent dictator, then I would seriously start to question the legitimacy of what bitcoin puts itself out there to represent: a decentralized currency.

The future of bitcoin, therefore, is in the belief that human nature is not ultimately corrupt, or that the ones that end up wielding the most power (even from the result of their benevolence) won't end up succumbing to the bad side of human nature (greed, lust for power, etc.).

Or, is there a something I'm missing? Oh, and please forgive me if I come across as a die-hard skeptic, but I'm only entering into a Socratic dialog in the hopes that you guys can convince me of the long-term security of the network.

[AndBobsYourUncle]

Fees or not fees, they still have to provide proof of work to solve the block. If they are benevolent enough to do it for free, great for all the people that want free money transfers.

Doesn't perceived benevolency always come before tyranny?

That's an interesting point  But even if over 51% of the "benevolent miners" banned together to attempt to cripple the network, it would still be extremely difficult and costly and time-consuming.

Yes, but I'm talking about a corporation with enough power to create a "mining pool" of its own. The corporation can offset the costs with a slight hit to their bottom line in the short-term. In the long-term, they gain complete control of the network.

[poly]

Transaction fees are simply competing for the limited block size.