Can Bitcoin survive on fees alone after block subsidy dies?

[Comeacross]

We talk about bitcoin 21m cap everyday but I think we talk less about what happen after year 2140. The block subsidy is scheduled to reach zero around the year 2140. After this, there will be no more new coins and miners will survive only on transaction fees. This was part of Satoshi original design but I'm curious whether this is sustainable in practice. Will that be enough to secure the network?

Once the last Satoshi is mined, bitcoin security will depend entirely on users competing for block space and paying fees high enough to support a strong global hashrate. Will demand for on chain settlement generate enough fees to keep mining profitable and 51% attacks economically unfeasible? Did Satoshi plan for for this or he assume bitcoin would be so valuable in the future? Or maybe he made mistake?

History shows bitcoin has adapted through every halving so far but I'm genuinely curious as we approach the end of the subsidy era. I know 2140 is still  very far but the incentive we build today determine if Bitcoin is still secure for next generations.

[Zaguru12]

This particular question has been discussed numerous times here, I will actually advise that you use more of the search button  for questions like this.

Nonetheless, this is actually a worry that I think all of us here wouldn’t be alive to see the last bitcoin mined and just like quantum computing scares let’s leave the worries till then.

We talk about bitcoin 21m cap everyday but I think we talk less about what happen after year 2140. The block subsidy is scheduled to reach zero around the year 2140. After this, there will be no more new coins and miners will survive only on transaction fees. This was part of Satoshi original design but I'm curious whether this is sustainable in practice. Will that be enough to secure the network?

I think in the next 20 years to come we will be even getting it clearer as maybe transaction fee will actually be sufficient for miners because by the 10th halving around 2048 the block reward would have reduce to 0.0488 bitcoin per block which is quite lower than even what miners earn now from bitcoin fees and further years more miners will be depending on fees far away from the exact year that the mining will be completed so it will be clear what happens next before 2140.

The idea is that the increasing price of bitcoin will help cushion for this plus then bitcoin would have had more adopters which means more transactions. Even if the block size remains same and then the people prioritize the layer 2s like lightening network, then opening/closing of channels will be on the base network plus it means larger transactions will be on the network too.

So by then technically we should be seeing more bitcoin been accumulated as fees and with the increase in the price then it could just be enough.

[Mia Chloe]

~snip

Mining itself is already becoming an unprofitable stuff to be honest. Basically from your question the most I can say is we'll probably get to know when we get there. However if I actually had to speculate I'd say what could happen would probably be a decline in numbers of active miners.

Transactions fees will still hold up but honestly this problem is still over a decade away and the closer you think we are getting to his point the farther it actually is.

[Cookdata]

Nonetheless, this is actually a worry that I think all of us here wouldn’t be alive to see the last bitcoin mined and just like quantum computing scares let’s leave the worries till then.

You know what's sad about this? If you deduct 2026 from 2140, that's 114 years from now, no human on this forum active today might be alive by then. Sad stuff.  

[Zaguru12]

You know what's sad about this? If you deduct 2026 from 2140, that's 114 years from now, no human on this forum might be alive by then. Sad stuff. 

Exactly the reason why I would say why worry for that, would someone had envisioned bitcoin in the last 114 years? I don’t think so, so we don’t even know what will happen before then but humans are too curious. Although the whole situation of whether the fees will be sufficient will be pertinent in the next 25 years from now.

[PrivacyG]

Bitcoin has only been around for about 17 years.  And look how much it changed.  How many Forks we had.  It adapted to the current times and if it can not survive on Fees alone, some thing will have to change.

Satoshi has obviously thought about what will happen in 2140.  I would personally say it is going to survive on Fees alone but that depends on many factors.  Including whether in the following 114 years there is going to be a Bitcoin competitor that ultimately proves to be superior and takes over.  I would say living the moment and not caring about the future is not the best way to approach this question either but it is not the end of the World.  If the survival had such a small chance, none of us would be here because why support some thing that has an expiration date.

[odolvlobo]

... there will be no more new coins and miners will survive only on transaction fees. This was part of Satoshi original design but I'm curious whether this is sustainable in practice. Will that be enough to secure the network?

Bitcoin mining is designed to be profitable for miners as long as there are transactions paying fees. This is because unprofitable miners stop mining and that makes it more profitable for the miners that remain.

The real question is whether fees will be enough to keep Bitcoin safe from a 51% attack, and nobody has answered that question (AFAIK). We will have a better idea in a decade or so when the subsidy drops to a point where it is exceeded by the fees.

[Repeat06]

Bitcoin has been in the market for a little over 17 years now and the time you mentioned is about 114 years or less. If we look at the demand for Bitcoin and the price of Bitcoin, then maybe we can understand this completely.

The same amount of fees that we are currently paying may become much larger in the future. But yes, if the demand for Bitcoin increases in the future, then maybe we will not see the crisis of miners and there will be no fear of this 51 attack.

There is still a lot of time and during this time, technology will improve further and at the same time we can expect to see technical improvements in Bitcoin. As we have seen against quantum computers.

I hope this comment by Satoshi Sir is helpful for you : https://bitcointalk.org/index.php?topic=48.msg316#msg316

[tromp]

The year 2140 is quite irrelevant in this discussion. Even with minimal fees, a well filled block brings in about 0.02 BTC in fees.

The year when block subsidy falls below that is 2056, a full 84 years before the last satoshi is mined,
and only 30 years from now. Most of us will live to see that. By 2076, block subsidy will be an insignificant fraction of tx fees.

The chain will have rather poor security by then if people are still paying minimal fees.
And a much higher price doesn't change the fact that the cost of an attack will be rather small compared to the value of an attack which also scales with price.

[Satofan44]

The year 2140 is quite irrelevant in this discussion. Even with minimal fees, a well filled block brings in about 0.02 BTC in fees.

The year when block subsidy falls below that is 2056, a full 84 years before the last satoshi is mined,
and only 30 years from now. Most of us will live to see that. By 2076, block subsidy will be an insignificant fraction of tx fees.

The chain will have rather poor security by then if people are still paying minimal fees.
And a much higher price doesn't change the fact that the cost of an attack will be rather small compared to the value of an attack which also scales with price.

The first part of this post is correct, the situation is not going to be something that we have to wait until 2140 to see as many incorrectly often quote that date. If this is going to be an issue of any serious proportions, then we will start seeing it much much sooner. Users need to stop falsely quoting the year 2140 bullshit. That said, the rest is wrong:

• Any view on this becoming an issue and how much of an issue is speculative.
• If it is going to become an issue, it will happen gradually which is the whole point of the 4 year cycle -- giving ample time for ideas, implementation and adaptation.
• The mining industry model may look completely different than what it is today, similarly how it is completely different today from its earlier years.
• The cost of attack is a meaningless number on its own, because who is going to attack it? The Bitcoin of today can not be attacked by anyone aside from a very big government funded operation and even in that case it would be very difficult.

We do not know how the space is going to look like, so you could only do very nuanced scenario analysis and planning but you would have to make so many scenarios with so many assumptions that it becomes meaningless. People falsely understood that Bitcoin's cost to attack and mining power have to always increase, they do not. Even if we flatline or decrease for 5 or 10 years it would not have any impact at all. The issue is that most people are terrible at nuanced thinking, so you can only think in terms of "secure and not secure". A reduction of mining power even by 50% of what it is today would be still extremely secure.

The space is going to be different, don't waste time speculating the future when you can't even accurately forecast what is going to happen the next year.

[Zaguru12]

The real question is whether fees will be enough to keep Bitcoin safe from a 51% attack, and nobody has answered that question (AFAIK). We will have a better idea in a decade or so when the subsidy drops to a point where it is exceeded by the fees.

It’s simple people cannot actually afford to answer this question because they don’t actually have how it this network or rather miners will react to the fees been solely their main source of incentive. The fees been enough as incentive will actually be just base on what happens to bitcoin transaction volume, how high it is for the miners to be able to continue to mine. The risk of 51% attack will come only if some miners are no longer profitable again and they leave so power reduces, but if mining remains profitable like right now then only a government sponsored 51% attack will still be the hindrance because of the cause.

This will be clearer even before we get to that year, even Satoshi thinks so

In a few decades when the reward gets too small, the transaction fee will become the main compensation for nodes.  I'm sure that in 20 years there will either be very large transaction volume or no volume.

[gmaxwell]

A reduction of mining power even by 50% of what it is today would be still extremely secure[/b].

No conjecture is required, you can see it today--BCH's block reward from inflation+fees is roughly equal to Bitcoin's income from fees alone: In the past week they averaged $1371/block while Bitcoin averaged $1155 in fees alone.

Cashies said they were making the Bitcoin of the future but I don't think this is exactly what they meant.   Still...

[BlackHatCoiner]

This has also been discussed in here: https://bitcointalk.org/index.php?topic=5574940.msg66422758#msg66422758

My answer on the what level of security is sufficient question is this:

1. How do you determine what level of security is sufficient?

That's a great question. How about this?

As long as no attackers collectively have access to the infrastructure for ~half the hashrate, then any level of security is sufficient. The 51% attack is relevant when an attacker is capable of taking access to the miners. Historically, all altcoin 51% attacks have occurred either because the attacker rented enough hashrate or infected computers with malware to gain CPU/GPU hash power. There has never been a case where an attacker practiced 51% attack and had ownership of the infrastructure.

With this definition of security sufficiency, the risk of Bitcoin is to encourage miners to switch into renting their hashpower part-time. According to Mining Rig Rentals, around 50 EH/s are available to rent. That's roughly 4% of hashrate. Currently low risk, but what if this number goes upwards in the future?

[philipma1957]

2010 satoshi said in 20 years which is 2030

Let's look

Note I rounded a bit.

2024 1,300,000 coins about 3.2 coins a block

2028.  650,000 coins. About 1.56 coin a block.   We need at least 150k a coin or more fees

?......?.............................................................................   satoshi 20 time pick


2032.  325,000 coins about 0.78 coins a block we need 300k a coin or more fees

2036.   162,000 coins about  0.39 coins a block we need 600k a coin or more fees

2040.     81,000 coins. About 0.195 coins a block we need 1.2m a coin or more fees.


Now some think miners quitting makes things  less secure some think it will be a disaster if miners quit as security will drop

Here is what I think if you are lucky you will live long enough to find out.

I will be 83 in 2040 I hope to see what happens at that 1/2ing

[Comeacross]

2010 satoshi said in 20 years which is 2030

Let's look

Note I rounded a bit.

2024 1,300,000 coins about 3.2 coins a block

2028.  650,000 coins. About 1.56 coin a block.   We need at least 150k a coin or more fees

?......?.............................................................................   satoshi 20 time pick


2032.  325,000 coins about 0.78 coins a block we need 300k a coin or more fees

2036.   162,000 coins about  0.39 coins a block we need 600k a coin or more fees

2040.     81,000 coins. About 0.195 coins a block we need 1.2m a coin or more fees.


Now some think miners quitting makes things  less secure some think it will be a disaster if miners quit as security will drop

Here is what I think if you are lucky you will live long enough to find out.

I will be 83 in 2040 I hope to see what happens at that 1/2ing

I pray God give you long life to witness 2040. Satoshi expected fee market to work by 2030 and not 2140. So the test start with 2-3 halvings and not with next generations as I put in my thread. Maybe we can see early warning if let say by 2036 fees can't replace 0.39 BTC subsidy, haspower will drop before 2140. One thing is certain if price doesn't reach that, either hashpower drops or fees must be painful for users.

This has also been discussed in here: https://bitcointalk.org/index.php?topic=5574940.msg66422758#msg66422758

My answer on the what level of security is sufficient question is this:

1. How do you determine what level of security is sufficient?

That's a great question. How about this?

As long as no attackers collectively have access to the infrastructure for ~half the hashrate, then any level of security is sufficient. The 51% attack is relevant when an attacker is capable of taking access to the miners. Historically, all altcoin 51% attacks have occurred either because the attacker rented enough hashrate or infected computers with malware to gain CPU/GPU hash power. There has never been a case where an attacker practiced 51% attack and had ownership of the infrastructure.

With this definition of security sufficiency, the risk of Bitcoin is to encourage miners to switch into renting their hashpower part-time. According to Mining Rig Rentals, around 50 EH/s are available to rent. That's roughly 4% of hashrate. Currently low risk, but what if this number goes upwards in the future?

Thank you. I searched the wrong way and miss that thread. I know 51% attack only matters if someone can actually gather half the hashpower. I'm still trying to connect your point about renting to the long term incentive problem.

[BlackHatCoiner]

Thank you. I searched the wrong way and miss that thread. I know 51% attack only matters if someone can actually gather half the hashpower. I'm still trying to connect your point about renting to the long term incentive problem.

My point is that the probability of a successful 51% attack comes, not from entities that have ownership of the infrastructure as that would be highly damaging to their business, but to people who simply figured out a way to have a temporary access to the infrastructure. This can realistically only happen if the attacker gets access to the mining rigs through renting them. There are platforms that act as marketplaces for renting hash power, as mentioned in my previous post.

Therefore the real risk comes from a gradual encouragement for miners to switch to renting their hash power instead of simply mining bitcoin. Over time, when many miners will go out of business due to competition, some percentage may choose to rent their ASIC miners instead of just turning them off or selling them on the market.

[Comeacross]

My point is that the probability of a successful 51% attack comes, not from entities that have ownership of the infrastructure as that would be highly damaging to their business, but to people who simply figured out a way to have a temporary access to the infrastructure. This can realistically only happen if the attacker gets access to the mining rigs through renting them. There are platforms that act as marketplaces for renting hash power, as mentioned in my previous post.

Therefore the real risk comes from a gradual encouragement for miners to switch to renting their hash power instead of simply mining bitcoin. Over time, when many miners will go out of business due to competition, some percentage may choose to rent their ASIC miners instead of just turning them off or selling them on the market.

Now I get it. This is exactly the long term incentive problem I was scared of in my Op. Block subsidy dying doesn't just reduce security budget, it also changes how hashpower exist. So by 2140 if Bitcoin security depends on rented hashpower, then security depends on rental price instead of Bitcoin price. Let see what happens in the coming halvings if hashpower start getting more liquid before the 2140.

[Satofan44]

Now some think miners quitting makes things  less secure some think it will be a disaster if miners quit as security will drop

Here is what I think if you are lucky you will live long enough to find out.

I will be 83 in 2040 I hope to see what happens at that 1/2ing

I already explained it, stop thinking in black and white and learn to think in scales and gradients. Security dropping even by a considerable quantity of the today's hashrate does not mean insecure, it means less secure relative to the peak security -- but it would still be fucking really secure. Many of the users here and people in general suffer from narrative bias, a lack of ability of thinking in gradients and abstracts -- these are the reasons which leads to fearmongering and misunderstandings in various topics.

A reduction of mining power even by 50% of what it is today would be still extremely secure.

This has also been discussed in here: https://bitcointalk.org/index.php?topic=5574940.msg66422758#msg66422758

My answer on the what level of security is sufficient question is this:

1. How do you determine what level of security is sufficient?

That's a great question. How about this?

As long as no attackers collectively have access to the infrastructure for ~half the hashrate, then any level of security is sufficient. The 51% attack is relevant when an attacker is capable of taking access to the miners. Historically, all altcoin 51% attacks have occurred either because the attacker rented enough hashrate or infected computers with malware to gain CPU/GPU hash power. There has never been a case where an attacker practiced 51% attack and had ownership of the infrastructure.

With this definition of security sufficiency, the risk of Bitcoin is to encourage miners to switch into renting their hashpower part-time. According to Mining Rig Rentals, around 50 EH/s are available to rent. That's roughly 4% of hashrate.

This is a qualitative description of what such a situation which is good, but a quantitative assessment would be more accurate but much more rigorous -- if done with scientific rigor, and not social media/forum bullshittery. 4% hashrate being available to rent publicly is not equal to the total hashrate available to rent.

Currently low risk, but what if this number goes upwards in the future?

Why would it? Do you think that this is a profitable model? Furthermore, in times when there is a lack of customers the hardware is losing value fast -- they can mine during that time, but that is not a sustainable dual-mode business model. You are aware that we have not applied any single additional security measure for this particular issue in a very long time, because there is no need. There are many lessons that can be learned from the shitcoin fiascoes. So the answer to the question, even if you assume that yes this is profitable and it will rise upwards in the future, is this: We will implement measures that will make the attack so costly that it will be near impossible.

[BlackHatCoiner]

So the answer to the question, even if you assume that yes this is profitable and it will rise upwards in the future, is this: We will implement measures that will make the attack so costly that it will be near impossible.

What kind of measures? Can you be more precise? Introduce them where? Bitcoin game theory relies on the presumption that the majority of the hashrate stays honest. There is no counter measure that can back the network up, if this theory fails.

[Ambatman]

We talk about bitcoin 21m cap everyday but I think we talk less about what happen after year 2140.

Maybe is because everyone of us today would not see Bitcoin after all blocks are mined
What I can say is thst
If Bitcoin can survive and operate until a century from now
I see no reason why fee would be an issue.
Like satoshi stated

Right.  Otherwise we couldn't have a finite limit of 21 million coins, because there would always need to be some minimum reward for generating.  In a few decades when the reward gets too small, the transaction fee will become the main compensation for nodes.  I'm sure that in 20 years there will either be very large transaction volume or no volume.

So it's either Bitcoin fails or successful not mediocre
So if it's still running around that year then it should be successful and fee shouldn't be a problem.