Decreasing rewards

[Holliday]

The very first users, when trying Bitcoin for the first time, were not aware that it was going to become what it is today - they put in time, effort and risk when no one else would.

What was the risk associated with mining the first blocks? A couple of minutes of personal time wasted, a couple of minutes of wear and tear on CPU, a dollar spent on electricity?

Man, that is a huge risk. I'm glad it paid off.  

Not selling the mined coins at $0.0001
Not selling the mined coins at $0.001
Not selling the mined coins at $0.01
Not selling the mined coins at $0.1
Not selling the mined coins at $1
Not selling the mined coins at $10
Not selling the mined coins at $100
Not selling the mined coins at $1000

At every price increase, there is a risk that a bitcoin would never be worth more. At some point along the way, for most early miners, that risk became "huge".

Anyway, Bitcoin is where it is today thanks to the early adopters. If the reward schedule was different, you may have never heard about the failed experiment called Bitcoin.

[Meuh6879]

I'm interested in the design choices and the motives behind them.

Save the world.

















From the idiocraty of bank strategies.

[Ix]

$100 in electricity per month for something that might never be worth anything?

A CPU uses around the same amount of electricity as an incandescent lightbulb. More like $5-10 a month.

[empoweoqwj]

How about all the time writing the original code - that is "risk" in terms of time spent that could have been used to do other things / earn money.

[wickedgoodtrader]

Minors will always collect transaction fees. In the future, the transaction fees will become a bigger part of the block reward.

Yes but the transaction fees will be no where near enough to make up for the difference in the lower block reward. THUS, it works like a ponzi. Either the price of bitcoin has to go up a bunch, or miners have to shut down because they can no longer pay their electric bills on a 1 coin/block. Then since they shut down their miners, the network shrinks and because unsecure and open to attack by anyone who decides to flip on their asic farm that they had previously shut down.

[Holliday]

Minors will always collect transaction fees. In the future, the transaction fees will become a bigger part of the block reward.

Yes but the transaction fees will be no where near enough to make up for the difference in the lower block reward.

How do you know how many fee including transactions will be included in blocks found years from now?

[empoweoqwj]

Minors will always collect transaction fees. In the future, the transaction fees will become a bigger part of the block reward.

Yes but the transaction fees will be no where near enough to make up for the difference in the lower block reward.

How do you know how many fee including transactions will be included in blocks found years from now?

Nobody knows how much transactions fees will generate in 5 years time. One of the many mysteries of bitcoin that only time can unravel.

[_Miracle]

For the O.P.
This was an interesting video.

http://www.youtube.com/watch?v=bTPQKyAq-DM

[Bitware]

So, we figured out that life is not fair and those who risk first and most usually reap greater rewards.

It must suck to feel like a spoiled entitled victim (child) all the time.

How do those people even function in society?

[BlockChainLottery]

Minors will always collect transaction fees. In the future, the transaction fees will become a bigger part of the block reward.

Yes but the transaction fees will be no where near enough to make up for the difference in the lower block reward. THUS, it works like a ponzi. Either the price of bitcoin has to go up a bunch, or miners have to shut down because they can no longer pay their electric bills on a 1 coin/block. Then since they shut down their miners, the network shrinks and because unsecure and open to attack by anyone who decides to flip on their asic farm that they had previously shut down.

There is no rule, law or right that miners have to get money only because the fact they are mining. So the price of Bitcoin doesn't have to go up. That's ridiculous. The number of miners will always be a balance between the money that can be made by mining and the costs of equipment, electricity, space, and expertise.

[empoweoqwj]

Minors will always collect transaction fees. In the future, the transaction fees will become a bigger part of the block reward.

Yes but the transaction fees will be no where near enough to make up for the difference in the lower block reward. THUS, it works like a ponzi. Either the price of bitcoin has to go up a bunch, or miners have to shut down because they can no longer pay their electric bills on a 1 coin/block. Then since they shut down their miners, the network shrinks and because unsecure and open to attack by anyone who decides to flip on their asic farm that they had previously shut down.

There is no rule, law or right that miners have to get money only because the fact they are mining. So the price of Bitcoin doesn't have to go up. That's ridiculous. The number of miners will always be a balance between the money that can be made by mining and the costs of equipment, electricity, space, and expertise.

I don't think he thought through his argument ... at all

[Coin_Master]

Without decreasing rewards bitcoin wouldn't be deflationary; we would all be a lot poorer. Decreasing rewards boost the price, and in turn increase rewards relative to fiat currencies.

Bitcoin isn't deflationary, it's inflationary because new coins are always being generated by PoW. Please stop spreading that meme.

Deflation is about value not supply.  The number of Bitcoins is completely irreverent.
Here is a quote from wikipedia "deflation increases the real value of money"
http://en.wikipedia.org/wiki/Deflation
Time and time again we see Bitcoiners talking about economics like they are qualified and have a degree.

Perhaps an example will help you understand:
In Janurary 2013 a loaf of bread cost 1 USD
100 USD would buy you 100 loaves of bread
1 Bitcoin would buy you 13 loaves of bread

In Janurary 2014 a loaf of bread now costs 2 USD
100 USD will buy you 50 loaves of bread (you get less for your money - inflation)
1 Bitcoin will buy you 500 loaves of bread (you get more for you Bitcoin - deflation)

Hope this helps.

[gollum]

The optimal crypto currency should have a built in algorithm for price stability, just like central banks try to target 1-2% inflation.

It can be done by letting an algorithm base the reward on:
*number of transactions per day
*number of addresses
*number of miners
*price of XYZ_Coin vs XAU...

Yeah, good luck with designing that algorithm ...

Or we could assign Ben Shalom Bernanke as the chairman of Central Bank of Bitcoinistan to handle the monetary policy of Bitcoin. Central banks are not as bad as people in this forum believes, the Fed has actually been pretty good at keeping prices of goods in USDollars more or less stable year to year.

True, if you define stable to mean losing 95% of its value in a human lifetime (my grandmother live to be about 100).  Ditto for the Canadian dollar etc. Or half it's value in 20-25 years.

Someone had to say it

With price stability I refer to the price today compared to one year ago, not 100 years ago.
To save all your fiat-money in 100 years is foolish, money is meant to be spent or invested in something with long term value or an asset which pays dividend, for example bonds, gold, stocks or real estate.

The lack of price stability in bitcoin is unacceptable since the BTC price goes up and down several % every day, and some days even drop with 50% or double in price.

[empoweoqwj]

The optimal crypto currency should have a built in algorithm for price stability, just like central banks try to target 1-2% inflation.

It can be done by letting an algorithm base the reward on:
*number of transactions per day
*number of addresses
*number of miners
*price of XYZ_Coin vs XAU...

Yeah, good luck with designing that algorithm ...

Or we could assign Ben Shalom Bernanke as the chairman of Central Bank of Bitcoinistan to handle the monetary policy of Bitcoin. Central banks are not as bad as people in this forum believes, the Fed has actually been pretty good at keeping prices of goods in USDollars more or less stable year to year.

True, if you define stable to mean losing 95% of its value in a human lifetime (my grandmother live to be about 100).  Ditto for the Canadian dollar etc. Or half it's value in 20-25 years.

Someone had to say it

With price stability I refer to the price today compared to one year ago, not 100 years ago.
To save all your fiat-money in 100 years is foolish, money is meant to be spent or invested in something with long term value or an asset which pays dividend, for example bonds, gold, stocks or real estate.

The lack of price stability in bitcoin is unacceptable since the BTC price goes up and down several % every day, and some days even drop with 50% or double in price.

What's unacceptable to you is obviously acceptable to a growing number of people on the planet.

[Coin_Master]

The lack of price stability in bitcoin is unacceptable since the BTC price goes up and down several % every day, and some days even drop with 50% or double in price.

What's unacceptable to you is obviously acceptable to a growing number of people on the planet.

Agreed.  Here is a voice of reason!
"What's unacceptable to you is obviously acceptable to a growing number of people on the planet."

[gollum]

The lack of price stability in bitcoin is unacceptable since the BTC price goes up and down several % every day, and some days even drop with 50% or double in price.

What's unacceptable to you is obviously acceptable to a growing number of people on the planet.

Agreed.  Here is a voice of reason!
"What's unacceptable to you is obviously acceptable to a growing number of people on the planet."

The volatility of bitcoin is nice for speculators, but not so fun for commerce since you can't hedge the currency risk of BTC/USD when you sell stuff for BTC.

[Meuh6879]

volatility is the mt.gox bot.

on others places, btc is very stable less than 50 euros in 1 month.

[empoweoqwj]

volatility is the mt.gox bot.

on others places, btc is very stable less than 50 euros in 1 month.

btc-e has more bots running than gox

[Bitware]

The volatility of bitcoin is nice for speculators, but not so fun for commerce since you can't hedge the currency risk of BTC/USD when you sell stuff for BTC.

The more intelligent humans accepting Bitcoin for purchases use a payment processor to instantly convert all Bitcoins they do not want to save into Fiat Currency at the time of sale/payment, which completely removes the concern you mentioned.

[jongameson]

The very first users, when trying Bitcoin for the first time, were not aware that it was going to become what it is today - they put in time, effort and risk when no one else would.

What was the risk associated with mining the first blocks? A couple of minutes of personal time wasted, a couple of minutes of wear and tear on CPU, a dollar spent on electricity?

Man, that is a huge risk. I'm glad it paid off.  

a burned out CPU/bus??