glascake (OP)
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September 02, 2021, 10:24:58 PM |
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Yes this headline turns some heads but hear me out:
The current block reward is ~300.000USD Each block contains ~2800 transactions on average. So far so good. That means that currently each confirmed transaction is worth over $100. Later when there will be no block Reward its expected that miners are paid by transaction fee. But there is no way people are gonna pay 100$ Worth of btc per transaction.
Let’s be realistic and say people will pay 2$ per transaction. This is only 2% of the reward of the current mining system.
In my understanding mining will shrink to 2% of the current hash rate. Otherwise it’s not profitable. And this is very dangerous to the security of Bitcoin.
Correct me if Im wrong!
I specifically didn’t write any btc amounts in the calculation only dollar amounts. Since miners will pay their ASICS and electricity in dollar. That the value that matters.
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Upgrade00
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September 02, 2021, 10:47:22 PM |
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The later you speak of, when there would be no more block reward is over 100 years from now; a lot would have happened between that period of time which would change the Bitcoin space from what it is now. I specifically didn’t write any btc amounts in the calculation only dollar amounts. Since miners will pay their ASICS and electricity in dollar. That the value that matters.
Since transaction fees are paid in Bitcoin, it would be best to describe it in that form. If 0.000030 BTC equals to just over a dollar now, it would be a lot different in price in 2140 (expected time of the last block reward).
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glascake (OP)
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September 02, 2021, 10:50:40 PM |
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Yes but my point is it doesn’t matter what the fee is in btc. If the fee would still be 0.000030BTC in 2121 but the fee alone if worth 100$ then you would not be willing to pay that. So it only matters what the fee is in $.
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jackg
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September 02, 2021, 11:00:13 PM |
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The network running at 2% of what it is now is still quite a secure network.
Any change that does occur could be quite spread out (over even 20 years towards the end - there'll be enough time to come up with a plan for how to address these shortcomings).
What if each block contains 100000 transactions instead of the current 2800, little infrastructure change is probably needed to change that (if any other than code and signalling). Each of those could pay $1 and overpay on the current system.
Also, if you're using bitcoin and you're a large bank, a small shop or anything inbetween, what's stopping you from storing your own version of the blockchain and hosting your own node and miner? Even if normal miners are expensive to run, there are solutions like sidehack's range that just run off a usb socket (normaly) and don't consume much power - although their current offerings are much closer to the usbc type power usage afaik.
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Upgrade00
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September 02, 2021, 11:02:48 PM |
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There's no guarantee that $ would still exist 200 years from now or that it would still be the global currency or that Bitcoin would still be priced against it. That's the reason for the 1st paragraph; the distance is too far off to find a solution now, as the reward continues to gradually reduce, the network would start adjusting for a time there would be no more rewards.
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glascake (OP)
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September 02, 2021, 11:16:33 PM |
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There's no guarantee that $ would still exist 200 years from now or that it would still be the global currency …
It’s about buying power. You have to use USD for this comparison NOW because it has consistent buying power. Bitcoin doesn’t. Usd will only be replaced buy something similarly consistent. If you get your paycheck and the next week you have half the buying power (like with btc) nobody will adopt that. What if each block contains 100000 transactions instead of the current 2800, little infrastructure change is probably needed to change that (if any other than code and signalling). Each of those could pay $1 and overpay on the current system.
The is a problem with that already and you know it (Blocksize). Bitcoin isn’t made to last forever, and I am just now thinking about the future.
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dansus021
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September 03, 2021, 12:29:13 AM |
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maybe bitcoin mining will not profitable aftert that big mining farm most likely gonna shutdown the operation and mining difficulty will down and more efficient hardware will come and home mining maybe showed up again
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odolvlobo
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September 03, 2021, 01:04:27 AM |
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Let’s be realistic and say people will pay 2$ per transaction. This is only 2% of the reward of the current mining system.
You are correct. However, it is not clear if $2 per transaction is sufficient or not. The current value of $100 per transaction doesn't mean that $2 is not sufficient.
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jackg
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September 03, 2021, 02:30:12 AM |
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The is a problem with that already and you know it (Blocksize). Bitcoin isn’t made to last forever, and I am just now thinking about the future.
Blocksize has physically been changed at least twice since Satoshi released the initial version of bitcoin. It's theoretically been changed another 2 times also with the two introductions of segwit and there looks to be a few proposals to change it again (with taproot and mimble wimble). Miners are the only ones able to change blocksize, they're going to be quite incentivised to do so if the fees are paying well and people turn away from bitcoin - sha256 ASICs only work on sha256 and the only place you're likely to get paid with that is bitcoin and some forks.
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ropyu1978
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September 03, 2021, 03:16:07 AM |
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Fewer competitors and less difficulty means that every miner with an installed machine will get a significant increase in profitability and more predictable income. All bitcoin miners share in the same economy and mine on the same network, so both public and private miners will see increased revenue,” said Kevin Zhang, the first major power plant in the US to start mining on a large scale, if you say miners are not making a profit, they will no longer want to mine.
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Reid
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September 03, 2021, 03:31:55 AM |
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It's not profitable because it's converted to USD. If you convert it to another currency then you will also look at the economy of the country that owns that currency. What if you can pay your electric bill in Bitcoin that is valued in Bitcoin only and not converted? I don't even know why we are talking about this right now because there is a 100 percent chance we won't witness the profitability per confirmed transactions only without block rewards. ![Grin](https://bitcointalk.org/Smileys/default/grin.gif)
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ranochigo
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September 03, 2021, 03:43:58 AM |
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100 years is a long time, but we're expected to be experiencing the effects far sooner. There is no point arguing from the perspective that we won't be using fiat in the future because it doesn't make sense. No one wants to make a transaction with a fees that takes a large proportion of their transaction value. The argument stays regardless. Rather, I'm more inclined to think that the transaction volume would rise to compensate for it. It is simply impossible for the transaction volume to stay at ~7TPS or else we'll never attain mass adoption. The capacity of the network can and will increase, if we were to still use Bitcoin as a mainstream currency by that time.
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leea-1334
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September 03, 2021, 04:57:53 AM |
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What if each block contains 100000 transactions instead of the current 2800, little infrastructure change is probably needed to change that (if any other than code and signalling). Each of those could pay $1 and overpay on the current system.
This sounds like a good plan except that is it not true that the direction of development now is on layer 2 rather than on chain? I think the size is still a problem so they would like to restrict it on chain like that and keep those 100k transactions all on Lightning. It will probably end up being no fees, but rewards being worth much more thanks to price.
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so98nn
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September 03, 2021, 05:04:55 AM |
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The later you speak of, when there would be no more block reward is over 100 years from now; a lot would have happened between that period of time which would change the Bitcoin space from what it is now. I specifically didn’t write any btc amounts in the calculation only dollar amounts. Since miners will pay their ASICS and electricity in dollar. That the value that matters.
Since transaction fees are paid in Bitcoin, it would be best to describe it in that form. If 0.000030 BTC equals to just over a dollar now, it would be a lot different in price in 2140 (expected time of the last block reward). Execllent. This is the prime reason why there will be more "demand" and less "supply" in the upcoming period and this is why the prices for bitcoin will rise crazy. People don't understand the increase in value in the form of USD and fail to understand rest of the calculation. If you are mining the bitcoin then you are getting paid in btc itself. So its not about how much dollar? It's about how much btc's you getting paid first and then make the conversion later into USD. With the increased demand the prices will hike for sure. Later we will need to care about how much each satoshi equals to dollars? The day will also hit us when satoshi would be over few dollars. This is not inflation, this is correction of the prices based on the supply and demand in the market. As far as I have read this over many times, this is how its gonna be in the future. No miners will be left in the dark for nothing. They are there, that's why the transactions are getting confirmed. So they will be paid today and all the time in the future in profits.
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Wind_FURY
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September 03, 2021, 05:12:08 AM |
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Correct me if Im wrong!
I don’t know about the calculation, but the opinion that miner profitability would be a problem when the block rewards are too small is a known problem. I asked the same question before, if the Core Developers would change the rewards structure without increasing the supply cap through a hard fork. But it was ignored and viewed as “stupid”.
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glascake (OP)
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September 03, 2021, 05:31:35 AM |
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This sounds like a good plan except that is it not true that the direction of development now is on layer 2 rather than on chain? I think the size is still a problem so they would like to restrict it on chain like that and keep those 100k transactions all on Lightning.
It will probably end up being no fees, but rewards being worth much more thanks to price.
It seems like you and Wind_FURY are the only ones that understand the problem, everybody else is just closing their ears and screaming: BLABLABLA THERE WILL BE NO DOLLAR EVERY DOLLAR COMPARISON IS POINT LESS But fail to understand it doesn’t matter if it’s written in dollar or btc, I could write the transaction fee in potatoes…
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davis196
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September 03, 2021, 05:46:39 AM |
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The mining difficulty and hashrate can be adjusted,so miners can still make money. The Bitcoin price might go up tremendously.I'm not the biggest "BTC price to the moon" believer in the world,but logic says that an asset with limited supply and increasing demand will going to cost more in the future.This is just common sense. If Bitcoin mining wasn't profitable,then why all those BTC miners are still mining BTC?Do you have some conspiracy theory to explain this?Is it because China is controlling Bitcoin?Or the CIA?Or the reptiles? ![Grin](https://bitcointalk.org/Smileys/default/grin.gif)
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pooya87
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September 03, 2021, 06:28:02 AM Merited by vapourminer (1) |
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I specifically didn’t write any btc amounts in the calculation only dollar amounts. Since miners will pay their ASICS and electricity in dollar. That the value that matters.
You are wrong and since you like to use USD values I'll give you USD values. When bitcoin started miners were earning $0 per block. We fast forward to each time the money they earned was cut in half (dropped 50%): - 2012-11-28 they were earning $75 per block
- 2016-07-09 they were earning $8,500 per block
- 2020-05-11 they were earning $61,875 per block
- 2021-03-09 they are earning $309,525 per block
All the above values are with 0 fees per block!
Although the price rise is not guaranteed but there is also no reason for the growth to slow down let alone stop. So historically speaking we have no reason to believe hashrate would drop just because profitability of mining bitcoin would decrease.
You also make the mistake about hashrate; it doesn't rise only with price (profit miners make) but also it increases with advancement of the hardware used to mine bitcoin (ie. new and more efficient ASICs).
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BlackHatCoiner
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September 03, 2021, 06:48:40 AM |
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Correct me if Im wrong! You're correct. Bitcoin, though, will always be profitable for some. It's just that the security of the network will decrease overtime. You are wrong and since you like to use USD values I'll give you USD values. When bitcoin started miners were earning $0 per block. We fast forward to each time the money they earned was cut in half (dropped 50%): - 2012-11-28 they were earning $75 per block
- 2016-07-09 they were earning $8,500 per block
- 2020-05-11 they were earning $61,875 per block
- 2021-03-09 they are earning $309,525 per block
All the above values are with 0 fees per block!
But, Bitcoin didn't worth the same all these years. It's a false thought to compare 2012 with 2016 and then with 2020, 2021, unless you think that one Bitcoin will worth a billion dollars when the reward shrinks by a lot. If the price isn't doubling each halving, then the security will decrease. Besides, OP didn't refer to the previous rewards, but when there won't be a reward.
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NeuroticFish
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September 03, 2021, 06:55:30 AM |
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Later when there will be no block Reward its expected that miners are paid by transaction fee. But there is no way people are gonna pay 100$ Worth of btc per transaction.
So you are worried about things that could happen in the far future based on assumptions from today. You can almost only be wrong. Just a quick scenario: average Joe will use off-chain transactions and basically only companies will send on-chain transactions, worth millions of $ per transaction. Now think again, do such transactions worth 100$ to be confirmed? I don't say that my scenario is more accurate than yours, as I said, in 100 year a lot can happen. But I would not be worried now about such scenarios.
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