Hello All

[John818]

This is my first topic.

Just wanted to say that I'm glad to finally take to leap of faith and join the community.

I'm new to bitcoin and am very excited to it's potential.

I have a noob question and would love a laymans answer if thats okay.

Can someone please explain how it's possible that when mining becomes unprofitable due to the halving effect of reward, some people are saying that it will continue to be profitable indefinately due to transaction fees.

Cheers.

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[Crookservers]

Welcome to BitcoinTLAK . Some one would definitely explain you about your question:)

Good Luck

[v_coin]

Hello!

[Svennisen]

Hello.

Reason mining becomes unprofitable is because the difficulty is continuously rising, ==> you have to get better hardware to get a piece of the cake.
Reason it will continue to be profitable is that instead of reward in form solved blocks, miners will take out bigger transaktion fees.


But of course, if you dont have the hardware, it is not profitable.

[John818]

Thanks for your reply.  But where do the transaction fees come from?  If I'm mining and discovering a block that only pays me 12.5 btc, please explain how I could be making 27.5 btc including the transaction fees?

I have shares in ASICMINER-PT and Freidcat mentions the above figures.

[orymh]

I think the idea is that, as more people use Bitcoins, the number of transactions keeps increasing. Eventually, there will be enough transactions happening, and for large enough amounts, that the cumulative value of those fees will make processing the transactions worthwhile.

[rolloffacliffpleaseanddie]

hey

[ranlo]

Thanks for your reply.  But where do the transaction fees come from?  If I'm mining and discovering a block that only pays me 12.5 btc, please explain how I could be making 27.5 btc including the transaction fees?

I have shares in ASICMINER-PT and Freidcat mentions the above figures.

Alright, what happens is this:

Right now the block reward is 25 BTC.
Let's say there are 50 transactions in the block and each of them paid a 0.001 BTC fee. This is 0.050 BTC

Whoever solves the block then gets 25.050 BTC.

Now, when the block reward (flat rate) no longer exists, transaction fees still will. So in the above example, you'd get 0.050 BTC for solving the block.

[rolloffacliffpleaseanddie]

Welcome to the forums

[btcspender]

Hello, Some great questions

[Dork.]

Hello!

[wightdeath]

Welcome

[John818]

Aaaaaaah, Ranlo.  Many thanks for this explanation.  So we are effectively charged a fee to attempt to solve a block and only the winner gets the block reward but also everyone else's 'post'.  


EDIT:  So well after the last bitcoin has been mined, we will continue to develop faster and faster hardware so that we can take our competitors fee for our own?

[ranlo]

Aaaaaaah, Ranlo.  Many thanks for this explanation.  So we are effectively charged a fee to attempt to solve a block and only the winner gets the block reward but also everyone else's 'post'.  


EDIT:  So well after the last bitcoin has been mined, we will continue to develop faster and faster hardware so that we can take our competitors fee for our own?

This is a hard thing to answer. The value of BTC and the amount of fees being input are what will determine it. Some will find it to be worth $1 per block to let their miners continue, some don't even care about the rewards and will let it go regardless, and others won't do it without $50+ a block. Each person is different.

[John818]

I appreciate we could be getting into murky waters given my limited understanding of the Bitcoin principles and the uncharted territory of the Bitcoin future, so no more questions...

...just a reiteration that I'm very pleased to be a part of this developing technology and community and am very excited for the future prospects.

I think the implications are way beyond our wildest imaginations, and what with the advent of 3D printing, I'd say we are on the precipice of the dawn of a new age.

[worldtreasurefinders]

Hello all, I'm a newbie too! 

[JSMill]

https://en.bitcoin.it/wiki/Transaction_fee

See above 

[ranlo]

I appreciate we could be getting into murky waters given my limited understanding of the Bitcoin principles and the uncharted territory of the Bitcoin future, so no more questions...

...just a reiteration that I'm very pleased to be a part of this developing technology and community and am very excited for the future prospects.

I think the implications are way beyond our wildest imaginations, and what with the advent of 3D printing, I'd say we are on the precipice of the dawn of a new age.

NP! And if you decide you want some free BTC (although it's pretty slow right now -- it will likely keep raising in value as time goes on) you can use an automatic timing rotator: http://coinfaucets.tk

It has many faucets in it and will let you skip from one to the next so it's pretty fast to run through them, and then it will show how long is left before their cooldowns are over so you don't have to keep up, .

[Hipx]

Hello

[Nik1ab]

Welcome to the btc forum!