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Author Topic: Bitcoin Network Deficit?  (Read 1961 times)
wolverine.ks
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April 01, 2013, 10:24:27 PM
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Can anyone explain how the network deficit is going to turn around? Does it need to turn around? The graph on blockchain.info looks pretty ominous.
I understand that as the block reward is reduced, the fees will be increased to hopefully cover the cost of mining, and that the miners are making money off of the rewards and the appreciation of their already mined stash...but the graph looks like the deficit is increasing and accelerating...is there a general theory as to what this graph will ultimately look like when the block rewards are stopped altogether?

thanks

-wolv
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Stephen Gornick
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April 01, 2013, 10:59:52 PM
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and that the miners are making money off of the rewards and the appreciation of their already mined stash...but the graph looks like the deficit is increasing and accelerating

Bitcoin obviously will need to gain further traction as a payment network for transaction fees to start reaching the level necessary to support a level of mining capacity sufficient to protect the network.  Fortunately we have a few decades or so more where the block reward subsidy alone should be more than adequate to attract a sufficient level of mining capacity.  If bitcoin doesn't gain traction as a payment network decades down the road, then the network will be at risk of 51% attack [i.e., possibly economically viable to perform if not that much equipment is needed].  If that risk grows then those with wealth in bitcoin might kick in to subsidize the network to attain the protection necessary.

But the amount of fee revenue today while Bitcoin is attempting to gain traction (and thus fees aren't even being required for most transactions) should probably not be extrapolated years or decades out to try to make any conclusions.

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