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Author Topic: Why BitCoin limit?  (Read 424 times)
Jordsie669
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April 08, 2013, 11:21:43 PM
 #1

Why is there the BitCoin limit? Because when the limit is reached we can't mine any BitCoins anymore  Sad
And why would people then continue mining?
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SnowDog2003
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April 08, 2013, 11:25:39 PM
 #2

Why is there the BitCoin limit? Because when the limit is reached we can't mine any BitCoins anymore  Sad
And why would people then continue mining?

If Bitcoin grows, then the amount of the transaction fees will be far larger in value than the mined coins.

If the fees remain small, then people will stop mining until it becomes much easier to find a block, and the miners that stay will be able to mine far more blocks than at present.
DannyHamilton
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April 08, 2013, 11:28:16 PM
 #3

Why is there the BitCoin limit? Because when the limit is reached we can't mine any BitCoins anymore  Sad
And why would people then continue mining?

There is a bitcoin limit because currency works better when it is rare and difficult to get.

People will continue mining to obtain the transaction fees.

Jordsie669
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April 08, 2013, 11:30:25 PM
 #4

Why is there the BitCoin limit? Because when the limit is reached we can't mine any BitCoins anymore  Sad
And why would people then continue mining?

If Bitcoin grows, then the amount of the transaction fees will be far larger in value than the mined coins.

If the fees remain small, then people will stop mining until it becomes much easier to find a block, and the miners that stay will be able to mine far more blocks than at present.


I dont get it? Why would I continue to mine bitcoins after the limit?
hodginsa
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April 08, 2013, 11:31:42 PM
 #5



I dont get it? Why would I continue to mine bitcoins after the limit?

Because the fees will still be mined.
winnate
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April 08, 2013, 11:31:52 PM
 #6

Mining will go on alot longer than you think, we are at 25 BTC per block then it will go to 12.5 and so on until we reach 21 million.  Its relatively easy now, mining will only get less and less valuable, but it's very necessary in order to ensure quick BTC transactions.
DannyHamilton
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April 08, 2013, 11:33:47 PM
 #7

Why is there the BitCoin limit? Because when the limit is reached we can't mine any BitCoins anymore  Sad
And why would people then continue mining?

If Bitcoin grows, then the amount of the transaction fees will be far larger in value than the mined coins.

If the fees remain small, then people will stop mining until it becomes much easier to find a block, and the miners that stay will be able to mine far more blocks than at present.


I dont get it? Why would I continue to mine bitcoins after the limit?

Because miners receive both the block subsidy (newly created bitcoins) and the transaction fees of all the transactions that they include in their block.

Keep in mind that we won't reach the limit for another 136 years.  So unless you are planning on living a VERY LONG time, there will always be new bitcoins created for your entire lifetime.  As the amount of new bitcoins per mined block is cut in half every 4 years, the value of the transaction fees is expected to increase.  Eventually most of the miners income will come from the transaction fees (perhaps at that time we'll stop calling them "miners" and start calling them "transaction processors"? Regardless the function they perform will be the same).

DannyHamilton
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April 08, 2013, 11:35:59 PM
 #8

Mining will go on alot longer than you think, we are at 25 BTC per block then it will go to 12.5 and so on until we reach 21 million.  Its relatively easy now, mining the subsidy will only get less and less valuable, transaction fees will likely increase in value, but it's very necessary in order to ensure quick BTC transactions.

Fixed that for you.

 Grin

dcjes
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April 08, 2013, 11:38:39 PM
 #9

But what happens to the value of the bitcoins when the transaction fees get to be so expensive?

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Peleus
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April 08, 2013, 11:45:10 PM
 #10

Transaction fee's won't (hopefully) get too expensive, it's just that there will be a lot of transactions.

Think of it this way.

At the start, there are very few people
-> Lots of rewards by minting coins
-> Tiny fee's from an insignificant number of people, not much reward there

At the end, there are lots and lots of people
-> No / insignificant rewards from minting coins
-> Tiny fee's from a huge amount of people, about the same as minting coins in the old days
winnate
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April 08, 2013, 11:46:15 PM
 #11

Mining will go on alot longer than you think, we are at 25 BTC per block then it will go to 12.5 and so on until we reach 21 million.  Its relatively easy now, mining the subsidy will only get less and less valuable, transaction fees will likely increase in value, but it's very necessary in order to ensure quick BTC transactions.

Fixed that for you.

 Grin

Thats why I'm in the newbie section  Cheesy
leroy_k
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April 08, 2013, 11:48:22 PM
 #12

The way I understand is the transaction fees don't increase, you can already pay them or not pay them at the moment.

The idea is that as BTC gets more popular and use of it spreads, there will be more transactions which will add up to an increase in TX fees.

If you don't pay fees your transaction can still be included but the transactions with fees are prioritised and some miners may refuse to include fee free transactions in any blocks they mine. eg. I sent 1BTC from about 40 inputs and didn't pay a fee so it took over a day to be included.
winnate
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April 08, 2013, 11:51:37 PM
 #13

What exactly causes a bitcoin transaction to confirm  Huh thats something I thought I knew but this thread makes me question myself.  I understood that you where queued with other transactions to fill an order, but it is the mining that validates the transaction, or the buying and selling of bitcoins on the network?  OR is it more in depth to due with the mining process?
DannyHamilton
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April 09, 2013, 12:14:13 AM
 #14

What exactly causes a bitcoin transaction to confirm  Huh thats something I thought I knew but this thread makes me question myself.  I understood that you where queued with other transactions to fill an order, but it is the mining that validates the transaction, or the buying and selling of bitcoins on the network?  OR is it more in depth to due with the mining process?

It is the mining that "confirms" the transaction.  "A confirmation" simply means that the transaction was included in a block.  "Multiple confirmations" simply means that more blocks were added to the blockchain after the block that includes the transaction (those additional blocks don't also include the transaction, they just come after the one block that has the transaction).

"Validating" a transaction is a bit different than "confirming" a transaction.  Every peer on the network validates that every transaction they receive is "valid" before they bother to relay it to any other peers.  If you try to construct an "invalid" transaction, it won't get any further than the computer you use to try to transmit it.

Confirming a transaction adds security to the transaction.  It makes it significantly more difficult for an attacker to reverse (or more specifically double-spend the inputs of) a transaction that they send to you.  The more blocks that get added to the blockchain after your transaction is in there, the more difficult it is to modify that portion of the blockchain and alter the transaction that you received.

There is a pool of unconfirmed transactions.  Each miner (or mining pool) is allowed to use any method they like to choose which of those unconfirmed transactions to include in the block they are mining.  Since the miners (or mining pools) receive the transaction fees of the transactions that they include (the transactions that they "confirm"), they have a financial incentive to choose the transactions that have voluntarily included a fee.  As a matter of fact they have a financial incentive to choose the transactions that have the highest fee per byte of transaction size.

The block has a maximum size.  If there are not enough fee-paying transactions to fill the block, most miners (or mining pools) will fill some of the excess space with some free transactions.  Most of them recognize that it is in their long term benefit to increase the popularity and usability of bitcoin.  However, they will obviously prioritize transactions with fees to increase their profits when possible.

As such, you drastically increase the likelihood that your transaction will be included in one of the next few blocks if you include a small fee.


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