Network stability

[EmilyClark]

Rewarding people for being on the network (mining) was a brilliant idea. The hope is that this creates a network stable enough that people begin trading in bitcoin. Then, once the reward for mining diminishes, people still want to be on the network because it is valuable for trading.

BUT, this means that mining profitability should not decrease before bitcoins become popular with lots of people for non-mining activities. It's possible that mining profitability will go down (lots of new rigs, reward eventually dropping to 25btc) before bitcoins are popular enough. What happens then? Lots of miners leave the network... What then?

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[luxgladius]

It's already happened. Mining is disabled in the default client right now as you just don't have a reasonable chance of solving any block in competition with dedicated mining setups.

[cothoms]

Emily,

While I can definitely see where you are coming from, I think miners have a bit different perspective.  BTC can not survive without miners since they are responsible for processing transactions.  If the reward becomes too small, miners will leave and the overall health of the BTC will suffer.  So, many are hoping that, with reduced mining efficiency, comes greater rewards, primarily through BTC appreciation.

[EmilyClark]

Exactly. That's the hope. What I am saying is that, if the timing doesn't work out right, it could be very bad..