Can Bitcoin survive on fees alone after block subsidy dies?

[d5000]

Worse yet, the value that Bitcoin fees have to protect is 2 orders of magnitude higher than for Doge.

The attack target value is not related directly to market cap. It is related to the potential the attacker can double spend.

I believe that number to be more related to the average value in purchasing parity that is transferred in each block.

Let's look at such an attack and how it would be peformed:

- The attacker buys the Bitcoins he wants to steal (and probably mixes them a bit)
- He spends the transactions in a single block, to different merchants and exchanges.
- He begins to mine in secret.
- He waits until the confirmation period at all merchants and exchanges is over and all orders are confirmed. Probably most of the time he'll try to swap the coins for altcoins.
- He takes over the chain and "rewinds" all his transactions.

The merchants and exchanges would all have some kind of maximum value he can deposit. This maximum value, however, depends on purchasing power and not BTC probably. Let's say he tries to spend 100,000 BTC (6 billion USD) on 1000 different platforms, 1 BTC on each platform. This would not be a problem with 60,000 $ per BTC. But it would be probably a problem with 600,000 $ per BTC, because only a few platforms would allow such big deposits. He would then have to try to scam a lot more platforms, which makes the attack more complex.

So I believe there is some relation between market cap and double spend potential but the relation is not linear. It would even be somewhat detectable: blocks with an unnatural spike in transacted BTC could rise the alarms in merchants and exchanges, and make them rise the confirmation requirement. That's why I think the attacker would try to stay inside the normal limits, and thus be bound to the average transaction volume.

Another source of income for the attacker are short sales but this is way more difficult to predict, it is probably more related to market cap, but also related to the number of BTC (and their value in USD/purchasing power) available for lending and the security measures of the trading platforms. Most trading platforms would probably stop trading as a security measure when they detect a long reorg, and thus the attacker may have severe difficulties in re-buying the coins without having to go through some sort of scrunity for the sources of funds.

[MrEazyLife]

It’s an interesting question, but I think people sometimes overlook that Bitcoin doesn’t need transaction fees in 2140 to match today’s levels it needs them to match the network’s economic value at that time. If Bitcoin keeps growing, users settling large amounts on-chain may be willing to pay much higher fees than we see today.

Exactly the point I was trying to make, I don’t see this as a big deal. The problem should be, bitcoin should keep growing so as to match the economic value of that time. Users won’t see it as a big deal to pay the fee that will be attached. So long as it’s worth it

[tromp]

Worse yet, the value that Bitcoin fees have to protect is 2 orders of magnitude higher than for Doge.

So I believe there is some relation between market cap and double spend potential but the relation is not linear. It would even be somewhat detectable: blocks with an unnatural spike in transacted BTC could rise the alarms in merchants and exchanges, and make them rise the confirmation requirement. That's why I think the attacker would try to stay inside the normal limits, and thus be bound to the average transaction volume.

Your reasoning is correct but lacks data. The daily transaction volume of Bitcoin is about 2 orders of magnitude higher than that of DOGE [1], and for that reason Bitcoin should have a correspondingly higher security budget.

[1] https://bitinfocharts.com/comparison/sentinusd-btc-doge.html#3m

[satscraper]

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.  

They might want to bequeath their BTC, so they trouble themselves with such a question. But in my view, bequeathing Bitcoin presents several risks related to its value in 2140. If it is no longer mined, then its value will be in the toilet. Conversely, if mining continues extensively, resulting in the highest price, their heirs would owe extreme taxes. So it is better to live off BTC right now than bother yourself with such questions about what happens to it in 2140.

[Wind_FURY]

One interesting statistic is that Bitcoin is already more sustainable from fees alone than any other cryptocurrency that relies on tail emission; the revenue from fees outweighs revenues from tail emission implemented elsewhere.

How did you calculate that?

Bitcoin daily fees averaged under $200K recently, while DOGE produces well over $1000K per day in subsidies.

Worse yet, the value that Bitcoin fees have to protect is 2 orders of magnitude higher than for Doge.

That makes Bitcoin almost 3 orders of magnitude less sustainable.

An interpretation of this statistic is that the market highly values fixed supply hard money, much rather than uncapped money.

Another interpretation is that the market values the original (and its network effects) much more than clones. If Bitcoin had a tail emission you would have reached the opposite conclusion.

Perhaps BlackHatCoiner is right. The market CURRENTLY values fixed supply rather than a cryptocurrency that has uncapped supply. BUT because Bitcoin is SOFTWARE FIRST and FOREMOST, the community should be OPEN to all possibilities that would help the network in its survival.

Probably decades from now when we're all dead, the next generation of Bitcoin HODLers would be more forgiving to those "blasphemous" proposals.

[d5000]

Your reasoning is correct but lacks data. The daily transaction volume of Bitcoin is about 2 orders of magnitude higher than that of DOGE [1], and for that reason Bitcoin should have a correspondingly higher security budget.

My post wasn't so much against Doge, but as a contribution to bring forward a bit the discussion about Bitcoin's future security budget. I consider the current security budget of Bitcoin much higher than necessary, even after the halving.

If we calculate the ratio between transaction volume and miner income, then we can get an estimation for the "double spend potential compared to the miner revenue".

To get a rough idea about the evolution, I've calculated this ratio for January with Gemini in each year since 2016. The numbers haven't been so different since back then, even if January 2025 seems to have had the highest ratio (and thus would be considered the "less secure January" so far).

In most years the value hovered between 200 and 250, with the lowest values for January 2018 (90), 2019 (107) and 2024 (165), and the highest for 2025 (340), 2026 (291) and 2021 (266).

Perhaps I'll start a thread about this doing the calculations for more months and contrasting multiple sources (I don't trust AIs that much with that kind of data, although the numbers at least don't look off)

A comparison with altcoins is however difficult. If you have low security budgets, even if you have a low transaction volume too, the exchanges may subestimate the attack potential. For example, if on a random altcoin which is acepted by at least one swap exchange you could attack the chain for enough time $1000, and the swap allows you to swap up to $10,000, then even if the transaction volume was near to zero it would be very risky to accept this coin.

Surprisingly, at least according to Gemini the same exercise didn't yield much lower values for Doge, but also numbers between 200 and 300, with even a spike to 794 for January 2021 (that was close to the coin's ATH).

[Wind_FURY]

Your reasoning is correct but lacks data. The daily transaction volume of Bitcoin is about 2 orders of magnitude higher than that of DOGE [1], and for that reason Bitcoin should have a correspondingly higher security budget.

My post wasn't so much against Doge, but as a contribution to bring forward a bit the discussion about Bitcoin's future security budget. I consider the current security budget of Bitcoin much higher than necessary, even after the halving.

But is it actually for us plebs to consider, or the miners who actually does all of the work? We can't truly have any strong opinions on the matter, no?

  ¯\_(ツ)_/¯

--SNIP--

A simple question,

Would you say that Bitcoin mining is centralizing or going more and more centralized? Is it easy for smaller miners to enter the Bitcoin mining industry, or harder? Are net profits growing or shrinking?