Eventually, sometime around the year 2140, the block reward will be 0 bitcoins due to the "halvings".
Please, correct me, if I understand it wrong. So in 2140 creating a block will give zero reward and no more transactions will be recorded because nobody will want to create blocks?
You are half correct and half incorrect.
Basically, in 2140, a new phase will be reached in Bitcoin's design where
the "halving" and "block rewards" will no longer exist. When that occurs,
the total number of bitcoins mined, will have been 21 million (actually a
little less, but that's another issue) and no new bitcoins can be validly
taken from the code. All blocks found/mined after this point in time,
will always have a coinbase transaction that is 0.00000000 bitcoins [*1].
Long before the 2140 deadline approaches, a "miner's fee market" will
slowly begin to become more important and increase, as it attempts to
offset the loss in "block rewards" due to the "halvings". So, as the system
slowly moves toward 2140, a transitioning is taking effect, and in theory
it has already started. Interestingly, when it begins to activate as a
balancing mechanism, it will forever be in effect, in whatever function it
performs, till the death of the Network. It becomes an important catchall.
The "fee market" is a corrective system designed to "perform/adjust" in
many important instances, both commonly known and unknown. Today
it is used for Spam attacks, tomorrow it will be used for Denial-of-User
attacks (and others), and through time and in the future, it will be used
as theorized in the Whitepaper. Very basically, the fee market is not a
simple market, but a security mechanism masquerading as a market.
In a way, the fee market is as important to the token (and ultimately
the blockchain), as PoW is to Mining/Block Building [*2].
So simply, in 2140 the "miner's fee market" will be
solely relied upon
as the "new block rewards". Miners will still "mine" and users will still
transact, because of transactions fees.
[1] In theory, if we "needed" to add more decimal places in the future,
prior to 2140, we will need to mine those decimals as well, which will
extend the programed deadline (but not exceed the 21 million). Whether
more decimals will be necessary or not, is another matter, but it is
possible that mining could continue with a subsidy for infinity. But if that
does occurs, IMO, it has a higher chance of breaking everything, then
providing true benefit. It is better to stop the subsidy at 2140 as a "Rule",
than to continue the deflation that no longer is a corrective force, but
becomes a destructive one instead. Satoshi decreased and stopped the
subsidy so that the Network becomes perfected over time. It is the
reverse of the current world system, which creates subsidy over time.
[2] The three systems secure themselves alone, and then reinforces and
compounds upon the others, providing this security and support only for
the benefit of the full system (and the ecosystem it creates). In this way,
the three systems become one entity and is what Bitcoin actually is and
why it has and will always thrive. It's as near a perfect system as humans
could create, and it's magnificence and contradiction of this world,
frightens even me sometimes.
