Turns out it was above 50%. Looks like mining will no longer be profitable in 3 weeks in anyway, unless the BC value goes up again dramatically.
If mining stops being profitable, people will need to start sending more transaction fees until it is profitable again, right?
No. Transaction fees are independent from the block mining reward. Transactions fees are currently quite rare, as there is plenty of space in an average block that there is no need to pay a transaction fee in order to prioritize your transactions.
I see no difference between mining and processing bitcoin transactions...except it's shorter to say mining.
There isn't a difference, but the 50 bitcoin reward that a miner gets for solving the hash and processing the transactions is how Bitcoin issues new currency into the network. Any transaction fees that may be found would add to that reward.
to be very clear..difficulty up, miners will start shutting down, blocks/hour will go down and people will have to wait longer for payments to go through. Then as individuals decide it's taking too long, they will start to voluntarily pay transaction fees until the payment goes through fast enough. As transaction fee revenue increases, mining will pick up again. This was all very clearly planned for from the start...
You're pretty close, but if miners drop out, and the average duration between blocks increases, paying a transaction fee would only speed up a transaction confirmation if there are enough transactions coming in during that time period to force that issue. Currently, we are way under the blocksize limit, and have plenty of space in the 'free' section.
ALSO, can difficulty ever go down?
Yes, it can. It's a limted, but self adjusting algorithem, kinda like 'fuzzy logic', that tries to adapt the difficulty of the hash problem to the availability of hashing power so that the entire network averages 6 blocks per hour.
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