May Miners Collude to Keep the 25 BTC Reward Indefinitely?

[Bitcoin++]

On each block there is a transaction of 25 BTC + fees with no input {No Inputs (Newly Generated Coins)}.
This is of course the reward to the miner who found the block.

I wonder if the miner who found the block could have rewarded himself with more than this?
If yes, I'm sure the rest of the network would reject the block so that this miner would end up with nothing, right?

Here comes my concern; in 2016 when the block reward is set to halve to 12.5 BTC, it is likely that many miners won't cover their electric bill, hence they go bust. They will of course be desperate and likely try to change the system. If this is case for the big miners they may collude to keep the block reward at 25 BTC indefinitely.

This will obviously not be good for Bitcoin's reputation but for the individual miners it will be worth trying. Better risk a dent in BTC's reputation than go bust with 100% certainty, right?

Isn't it likely that several of them will collude and get more than 51% of the hashing power to agree on 25 BTC indefinitely?

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[Varicon]

If the block reward was kept higher, it would likely cause the price to drop, so it's not in the best interest of miners.
We should also see more in transaction fees if the amount of transactions rise over time.

[franky1]

imagine miners like worker bee's, processing the pollen for their hive.
well miners dont make the decisions these days..... but the queen bee (mining pool owners) have the ultimate control, so in theory only 3 or 4 queen bee's need to collude to change the orders of all worker bee's.

that being said, the honey (bitcoin block/reward) will taste different and the people that like honey (independent nodes) will reject the honey if it doesnt meet certain standards. so its in their interest to not mess with it.

what will happen is simple. when there is knowledge that a honey famine is imminent they will start to stockpile as much honey as they can, to start creating demand and a price rise. basically doubling the price of it so that when they do sell it still covers costs.

but right now many are stupidly selling as soon as its made, even if they are at a loss, they are selling, only a few smart ones are hoarding.

many miners wont be able to continue for 2 years selling at a loss. they will either give up mining, or learn economics to survive. meaning within the next 2 years they will realise its better to stockpile and cause a demand price rise, rather then go out of business. those that continue to sell at a loss, will basically give up.

mining is suppose to be to accept all transactions and get a reward for doing so (satoshi's utopian dream). as soon as mining pools switch back to that basic theory and use economics (hoarding) to get a true value for their hard work. then trying to rely on demanding extra fee's as a subsidy, will just shoot them in the foot.

there is no benefit in demanding higher fee's which work out at less then 1% subsidy ontop of the reward. its far easier to just hoard the coin and get a bigger price for the reward.

fee subsidies are not needed for decades, so i see no reason why mining pools should even be concentrating on demanding this 1% extra subsidy now, whilst selling off the reward instantly at a discount.

economics will win in the end.. especially when there is 2 years to go for them to see the light of day

[Jcw188]

imagine miners like worker bee's, processing the pollen for their hive.
well miners dont make the decisions these days..... but the queen bee (mining pool owners) have the ultimate control, so in theory only 3 or 4 queen bee's need to collude to change the orders of all worker bee's.

that being said, the honey (bitcoin block/reward) will taste different and the people that like honey (independent nodes) will reject the honey if it doesnt meet certain standards. so its in their interest to not mess with it.

what will happen is simple. when there is knowledge that a honey famine is imminent they will start to stockpile as much honey as they can, to start creating demand and a price rise. basically doubling the price of it so that when they do sell it still covers costs.

but right now many are stupidly selling as soon as its made, even if they are at a loss, they are selling, only a few smart ones are hoarding.

many miners wont be able to continue for 2 years selling at a loss. they will either give up mining, or learn economics to survive. meaning within the next 2 years they will realise its better to stockpile and cause a demand price rise, rather then go out of business. those that continue to sell at a loss, will basically give up.

mining is suppose to be to accept all transactions and get a reward for doing so (satoshi's utopian dream). as soon as mining pools switch back to that basic theory and use economics (hoarding) to get a true value for their hard work. then trying to rely on demanding extra fee's as a subsidy, will just shoot them in the foot.

there is no benefit in demanding higher fee's which work out at less then 1% subsidy ontop of the reward. its far easier to just hoard the coin and get a bigger price for the reward.

fee subsidies are not needed for decades, so i see no reason why mining pools should even be concentrating on demanding this 1% extra subsidy now, whilst selling off the reward instantly at a discount.

economics will win in the end.. especially when there is 2 years to go for them to see the light of day

The only issue with miners starting to stockpile is that I think they might begin to panic.  If there is a panic and the price is going down, the first to sell is the winner.  They won't want to keep mining and not getting anything back, watch the price go down, and just keep paying for electricty out of pocket.

[w00tcoin]

Yeah ... BTC was not worth much more than LTC until the block split from 50 to 25.

Then it skyrocketed.

I am hoping LTC will do the same thing.

[BurtW]

If you are interested in a technical, as opposed to economic, discussion of this very subject see:

https://bitcointalk.org/index.php?topic=352734.0

If part of the network decides to keep the block reward at 25 and the rest of the network drops to 12.5 then this would, in effect, create just another alt coin.

tl;dr summary of the above thread here:

https://bitcointalk.org/index.php?topic=352734.msg3796420#msg3796420

[Bitcoin++]

BurtW, thank you for linking to the technical discussion.

So if I understand correctly
* Yes, it is possible for a cartel to change the rules, e.g. keep 25 BTC block reward indefinitely
* This would make a fork where other miners keep original bitcoin and the cartel in a sense has created a new altcoin

Some technical questions:
* Owners of bitcoin before that point have coins in that can be spent in either fork, right?
* Is there some mechanism in Bitcoin Core / standard clients that makes sure these only get spent in the bitcoin fork (not the cartel altcoin fork)?
* If the cartel only mines in their own fork, then the remaining miners will have a very long confirmation time until difficult adjusts? 

[panck4beer]

* Is there some mechanism in Bitcoin Core / standard clients that makes sure these only get spent in the bitcoin fork (not the cartel altcoin fork)?

The coins existing prior to fork can be spent in both chains with the same signed tx you make (if someone propagate it in the other chain). If you want use both chains, the best would be resend all your old coins to new different address at each chain at the same time.

[BurtW]

BurtW, thank you for linking to the technical discussion.

So if I understand correctly
* Yes, it is possible for a cartel to change the rules, e.g. keep 25 BTC block reward indefinitely
* This would make a fork where other miners keep original bitcoin and the cartel in a sense has created a new altcoin

Some technical questions:
* Owners of bitcoin before that point have coins in that can be spent in either fork, right?
* Is there some mechanism in Bitcoin Core / standard clients that makes sure these only get spent in the bitcoin fork (not the cartel altcoin fork)?
* If the cartel only mines in their own fork, then the remaining miners will have a very long confirmation time until difficult adjusts?  

Everyone that has coins before the fork gets to have coins on both forks, effectively doubling their coins.  I expect Bitcoin believers would eventually just sell the alt coins and buy more Bitcoins and the alt coin believers would sell their Bitcoins and buy more of the alt coin.  Eventually all the coins that are in the common trunk would get spent and you end up with two separate block chains.

Let's assume that the network splits exactly in half.  In this case there would be one long adjustment period on both chains unless the alt chain, in addition to the change in subsidy, also makes changes to compensate for the sudden change in hash rate - which they would probably do.  Instead of 10 minute confirmation times we would have 20 minute confirmation times.  Instead of lasting about 14 days this would last about 28 days.  Then the real Bitcoin network would adjust and after about 28 days of 20 minute confirmation times it would get back to 14 day adjustment periods of 10 minute confirmation times.

[dogechode]

Even if someone had a mind to do this, I seriously doubt that they could rally enough forces to make it successful. A lot of miners (and people involved in crypto in general) are greedy and selfish and fuck each other over at every turn. A massive cooperative effort to forcibly impose a change seems improbable to me.

[BurtW]

Even if someone had a mind to do this, I seriously doubt that they could rally enough forces to make it successful. A lot of miners (and people involved in crypto in general) are greedy and selfish and fuck each other over at every turn. A massive cooperative effort to forcibly impose a change seems improbable to me.

A more "realistic", but still not going to happen, scenario is that a small group of miners and nodes get together and cause a branch.  Let's say 5%.  They would have to make changes to deal with the 95% drop in hash rate on their chain plus whatever other "fixes" they want to implement.  The main chain would experience a 5% drop in hash rate and would probably not even notice the difference.

The remaining 95% could simply wait until there was a way to sell the new alt coin and then dump all their free alt coins on the poor alt coin market.

Bitcoin is a beautifully designed system on many levels.

[dogechode]

Yeah exactly. There have been countless suggestions of "let's fork BTC and create a new alt that will be like bitcoin, only better, we can call it bitcoin+ or bitcoin 2" that never panned out. At the end of the day, simply being first is immensely powerful.

If you think about it, bitcoin kind of sucks in a lot of ways. Crazy transaction confirmation times, questionably small coin cap requiring people to deal with funky 8-point decimal figures, getting more and more condensed into large mining consortiums every day, etc etc. There are altcoins that have the benefit of being able to improve upon the model after seeing what did and did not work well for BTC, but they simply weren't first so they're mostly stagnating.

[DeathAndTaxes]

Even if someone had a mind to do this, I seriously doubt that they could rally enough forces to make it successful. A lot of miners (and people involved in crypto in general) are greedy and selfish and fuck each other over at every turn. A massive cooperative effort to forcibly impose a change seems improbable to me.

A more "realistic", but still not going to happen, scenario is that a small group of miners and nodes get together and cause a branch.  Let's say 5%.  They would have to make changes to deal with the 95% drop in hash rate on their chain plus whatever other "fixes" they want to implement.  The main chain would experience a 5% drop in hash rate and would probably not even notice the difference.

The remaining 95% could simply wait until there was a way to sell the new alt coin and then dump all their free alt coins on the poor alt coin market.

Add to that the 95% miners would have a very vested interest in ensuring this imposter dies in the cradle. This is even more likely if the imposter tries to use the bitcoin brand because it creates user confusion and negative PR. So say 6% of those miners could temporarily take a small paycut and 51% attack the imposter.  Exchanges accepting the imposter coins could potentially go bankrupt, merchant adoption would essentially be zero.  In all these scenarios what the person proposing it usually fails to consider is the application of risk.

It is interesting to note that as the last subsidy cut approached some predicted the same thing happening then.  Of course it didn't; miners tend to be pragmatic.  1 bitcoin in the wallet is worth more than a scheme to have two.