25btc/block soon?

[mmortal03]

When are we going to be seeing 25btc/block? I can only imagine that the difficulty is going to go through the floor when that happens.

The change will occur somewhere in Dec 2012.  The exact date will vary depending on average block time.

According to the Mesoamerican Long Count calendar, it will occur on December 21, 2012.

[1713517671]

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[1713517671]

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[mrdavis]

According to the Mesoamerican Long Count calendar, it will occur on December 21, 2012.

What a disappointment to find this reference at the end of the thread. It was my first thought and I wanted to make the joke.

[ElectricMucus]

According to the Mesoamerican Long Count calendar, it will occur on December 21, 2012.

What a disappointment to find this reference at the end of the thread. It was my first thought and I wanted to make the joke.

Interestingly we could make a practical joke out of it if people begin to use the lagging difficulty adjustment so that the probability that the date is hit exactly is maximized. All it would take is throttle the hashing power by a few fractions of a % before every adjustment

[odysseus654]

You know, considering that one purpose of the coin drops is eventually to get to zero and have everything be running off of transaction fees, perhaps some adjustment to the transaction fees should be made near these jumps so as to get some (not all) of the lost-gen in as increased fees?  I know that I hate paying fees myself, but if a block only generates 0.1 BTC for whoever creates the block then we're not gonna see much difficulty by the time we get to that point.

Any drop in difficulty when we get to 25 BTC I don't see as that problematic, it's when we get to the lower levels that I'm more concerned about long-term damage.

[DeathAndTaxes]

You know, considering that one purpose of the coin drops is eventually to get to zero and have everything be running off of transaction fees, perhaps some adjustment to the transaction fees should be made near these jumps so as to get some (not all) of the lost-gen in as increased fees?  I know that I hate paying fees myself, but if a block only generates 0.1 BTC for whoever creates the block then we're not gonna see much difficulty by the time we get to that point.

Any drop in difficulty when we get to 25 BTC I don't see as that problematic, it's when we get to the lower levels that I'm more concerned about long-term damage.

No matter how you structured the fees there simply isn't the transaction volume to support the 25 BTC which will be removed.  The developers have expressed interest in modifying fee structure and IMHO the current structure is simply unsustainable but fees don't matter if the volume is so low.

http://blockchain.info/charts/cost-per-transaction-percent

The cost of a transaction (w/o subsidies0 is roughly 10%.  So if today all block subsidies were eliminated to support current network hashing power at current prices would require a 10% fee structure.  Note that is a fee on both transaction and change.  So actual fee would be much higher maybe 15%+.

The goal should be to grow the network.  With 10x the transaction volume it would require a fee of 1%.  With 100x the transaction volume it would require a fee of 0.1%.

[mmortal03]

According to the Mesoamerican Long Count calendar, it will occur on December 21, 2012.

What a disappointment to find this reference at the end of the thread. It was my first thought and I wanted to make the joke.

Whenever it is, I hope it won't be the end of the world for bitcoin.

[mrich8]

I used to live in a building that did not sub-meter each apartment for it's own electricity. Literally, each unit did not have a meter. Only the entire building of over 25 apartments, had a single meter.

To assign electricity costs, they sent a monthly bill that divided the building's bill based on how many square feet you had in the apartment and how many occupants in the apartment. They literally had no idea how much electricity you really use. The same idea was used to bill for water.

These were fully private apartment homes with outside entrances, not dormitory halls etc. No part of any contract addressed concerns of over-usage by any tenant.

So very literally, in these apartments, mining would cost the entire building in a higher bill, but you would only pay some tiny fraction more, and there would be no legal recourse, in the unlikely event they discovered that you were somehow using a disproportionate share.

[sadpandatech]

So very literally, in these apartments, mining would cost the entire building in a higher bill, but you would only pay some tiny fraction more, and there would be no legal recourse, in the unlikely event they discovered that you were somehow using a disproportionate share.

  I would be very careful with that assumption. Before anyone goes hooking up twice the electric usage worth of mining equip, it would be highly advisable to atleast check if where you live even has 'rental control laws'. I am only familiar with those here in Florida which only require the landlord give you 30 days notice to raise your rent. And you can bet your ass if it were an electric bill included he is highly likely to take you to court for the amount over what would be considered a 'reasonable accomadation' amount that was included in any rent.  Just be careful, and do your homework is all.

   Cheers,
    Derek

[runeks]

So the survival of Bitcoin seems to very much depend on the decline in block reward coinciding with an increase in transaction volume. Can anyone say why Satoshi chose the 2 year period as amount of time after which the block reward halves? Wouldn't it have been safer to choose, say 4 years, to allow more time for adoption before block rewards are lowered?

[molecular]

  If we're estimating, I would say difficulty will be almost double what it is now and price will be $1.50 or less. Unless we have some heavy market intervention between now and then.

Heh. I'm pretty sure the price will not be $1.50 +- 1.00

[btc_artist]

So the survival of Bitcoin seems to very much depend on the decline in block reward coinciding with an increase in transaction volume. Can anyone say why Satoshi chose the 2 year period as amount of time after which the block reward halves? Wouldn't it have been safer to choose, say 4 years, to allow more time for adoption before block rewards are lowered?

Perhaps it wouldn't even have to be hardcoded at 2 or 4 years-- why not have a dynamic formula based on number of transactions and amount of BTC being transferred (or something to that effect)?

Having said that, it's probably not a good idea to try and change it now.

[molecular]

So the survival of Bitcoin seems to very much depend on the decline in block reward coinciding with an increase in transaction volume. Can anyone say why Satoshi chose the 2 year period as amount of time after which the block reward halves? Wouldn't it have been safer to choose, say 4 years, to allow more time for adoption before block rewards are lowered?

Perhaps it wouldn't even have to be hardcoded at 2 or 4 years-- why not have a dynamic formula based on number of transactions and amount of BTC being transferred (or something to that effect)?

Amount of BTC being transferred can easily be manipulated at low to no cost. So that might not be a good idea. If, at all, you'd probably want to base it on fees payed per block or something.

Also note: not only the number of transactions varies, but also the fee per transaction itself. The default (and minimum) fee in the standard client might offer a good enough way to increase/decrease fees when time comes.

Also: A low incentive would decrease hashpower (as you fear) and therefore security of the blockchain. Awareness of this might trigger users to pay more fees in order to have better security, I'm not sure about this.

Additionally: The survival of bitcoin depends on increase of transaction volume not only (maybe) by this mechanism, but also by the fact that if it doesn't grow fast enough, it will probably fail at some point for other (more "social") reasons.

Having said that, it's probably not a good idea to try and change it now.

I agree

[jetmine]

I used to live in a building that did not sub-meter each apartment for it's own electricity. Literally, each unit did not have a meter. Only the entire building of over 25 apartments, had a single meter.

... snip ...

So very literally, in these apartments, mining would cost the entire building in a higher bill, but you would only pay some tiny fraction more, and there would be no legal recourse, in the unlikely event they discovered that you were somehow using a disproportionate share.

You only pay that tiny fraction until your 24 neighbours discover "free mining" too.  Then, not even stopping your own rig would get you off the hook (or rather, just a tiny bit)... :-)

[jetmine]

Also: A low incentive would decrease hashpower (as you fear) and therefore security of the blockchain. Awareness of this might trigger users to pay more fees in order to have better security, I'm not sure about this.

The current behaviour of miners is not towards security at all, much the opposite (pools!).

Citing "security" as justification to push a pro pooled-miner development is a blatant lie.

To really improve security, one has to consider incentives for miners to give up on big pools and return to solo or small groups operation.

[Meni Rosenfeld]

So the survival of Bitcoin seems to very much depend on the decline in block reward coinciding with an increase in transaction volume. Can anyone say why Satoshi chose the 2 year period as amount of time after which the block reward halves? Wouldn't it have been safer to choose, say 4 years, to allow more time for adoption before block rewards are lowered?

It is 4 years.

The reasoning behind only 4 years is that what Satoshi really envisioned is a stable monetary base without inflation. Some inflation at first is necessary, but he wanted to "get over with it" as quickly as possible.

Also: A low incentive would decrease hashpower (as you fear) and therefore security of the blockchain. Awareness of this might trigger users to pay more fees in order to have better security, I'm not sure about this.

The current behaviour of miners is not towards security at all, much the opposite (pools!).

Citing "security" as justification to push a pro pooled-miner development is a blatant lie.

To really improve security, one has to consider incentives for miners to give up on big pools and return to solo or small groups operation.

That's a myth. It's possible to have large pools without them having control of the blocks, and thus, without a security risk. Also there's p2pool.

[jetmine]

That's a myth. It's possible to have large pools without them having control of the blocks, and thus, without a security risk. Also there's p2pool.

I can imagine how such a pool could work in theory, yes.  But it would need special miner software and I don't see any actual implementation, not to mention a popular one (please prove me wrong on this!).  Also, it would still be easy for a pool operator to distribute two types of software, one auditable and one crook.  For the user it's almost impossible to distinguish, yet for the security of btc it is crucial.

And last not least, the current crop of miners doesn't seem to be caring about it anyway.  They just flock to whomever pays out more and has more blocks quick.

Yet they will cheer if you enforce higher transaction fees "for security reasons", no doubt..

[DeathAndTaxes]

That's a myth. It's possible to have large pools without them having control of the blocks, and thus, without a security risk. Also there's p2pool.

I can imagine how such a pool could work in theory, yes.  But it would need special miner software and I don't see any actual implementation, not to mention a popular one (please prove me wrong on this!).  Also, it would still be easy for a pool operator to distribute two types of software, one auditable and one crook.  For the user it's almost impossible to distinguish, yet for the security of btc it is crucial.

Why would the pool issue miner software.  Your right that would be a stupid solution.

The major change is that the miner generate block header.  It simply requires a change in mining pool protocol.  Instead of pool generating headers the miner generates headers (using pool reward address) and submits valid shares to the pool.

No reason 3rd party miners can't support this.  You are right it requires will on the behalf of the community but there is no technical reason that a pool w/ >51% of hashing power to represent any danger to Bitcoin.

[Meni Rosenfeld]

I can imagine how such a pool could work in theory, yes.  But it would need special miner software and I don't see any actual implementation, not to mention a popular one (please prove me wrong on this!).

To be sure, this isn't yet practiced. Eventually it will happen, so it's silly to say pools are a security risk going forward.

Also, it would still be easy for a pool operator to distribute two types of software, one auditable and one crook.  For the user it's almost impossible to distinguish, yet for the security of btc it is crucial.

Pool ops don't typically make mining software.

And last not least, the current crop of miners doesn't seem to be caring about it anyway.

They don't have to. It's more important that developers of mining software care.

They just flock to whomever pays out more and has more blocks quick.

And eventually, this probably will be small pools with a p2pool backend.

[molecular]

Also: A low incentive would decrease hashpower (as you fear) and therefore security of the blockchain. Awareness of this might trigger users to pay more fees in order to have better security, I'm not sure about this.

The current behaviour of miners is not towards security at all, much the opposite (pools!).

Citing "security" as justification to push a pro pooled-miner development is a blatant lie.

To really improve security, one has to consider incentives for miners to give up on big pools and return to solo or small groups operation.

I was thinking about an attack by an indiviual, corporation, bank or government (agency). Pooled mining protects against that just as well as long as pool ops don't turn evil or cartel up.

[molecular]

That's a myth. It's possible to have large pools without them having control of the blocks, and thus, without a security risk. Also there's p2pool.

I can imagine how such a pool could work in theory, yes.  But it would need special miner software and I don't see any actual implementation, not to mention a popular one (please prove me wrong on this!).  Also, it would still be easy for a pool operator to distribute two types of software, one auditable and one crook.  For the user it's almost impossible to distinguish, yet for the security of btc it is crucial.

p2pool is growing quite popular in the litecoin community, it seems.