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Author Topic: Convince people to mine/create new blocks when there is nothing to mine  (Read 1890 times)
DrSammyD
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May 23, 2011, 05:13:27 PM
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So from what I understand, the amount of computation that goes into finding the hash of a new block is what makes bitcoin secure. Because of the proof of work, it would be hard, and gets harder, to spoof the chain.

So then in order to convince people to spend their computation time on finding harder and harder hashes, bitcoin allows them to mine coins. So then, my question is, why would people to continue spending more and more computation time to create more secure blocks once you can no longer mine coins in 140 years?
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May 23, 2011, 05:20:33 PM
 #2

Transaction fees will slowly replace the block reward.
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May 23, 2011, 07:10:48 PM
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If Bitcoin even has 1 percent of the success we hope it does, transaction fees will be far larger than the block reward ever was.

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May 24, 2011, 01:24:04 AM
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so the higher a fee offered, the quicker a transaction is processed?
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May 24, 2011, 01:32:44 AM
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Credit cards already take 2-3% fees so I don't think 1 or 2% would be a problem.
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May 24, 2011, 01:55:45 AM
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Why?  CC's pay 1$ + 2-3% so for small transactions around 1$ the merchant loses a lot of money.  It shouldn't be atypical to pay 10% for microtransactions.

If they're not willing to pay no one should provide them the computational service required to facilitate it.
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May 24, 2011, 03:36:12 AM
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so the higher a fee offered, the quicker a transaction is processed?

Right now a fee isn't going to make blocks come quicker, but a fee does ensure miners have incentive to put yours in, a no fee tx relies on their generosity. Eventually the build up of fees will actually incentivise marginal miners to turn on or switch from another task resulting in a quicker block.

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May 25, 2011, 12:59:55 AM
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If the fees aren't enough to make mining profitable, people will stop mining.
Then the difficulty is reduced and blocks still average 10 minutes between.
DrSammyD
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May 25, 2011, 04:25:49 AM
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If the fees aren't enough to make mining profitable, people will stop mining.
Then the difficulty is reduced and blocks still average 10 minutes between.

And if the difficulty is reduced, then it becomes easier to spoof the chain.

Do all the transaction fee's of a block of transactions go to the person who successfully creates the block?
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May 25, 2011, 06:52:08 AM
 #10

And if the difficulty is reduced, then it becomes easier to spoof the chain.

Well, sorta.  Fooling the chain is neither as easy nor as useful as popular imagination makes it seem.

Do all the transaction fee's of a block of transactions go to the person who successfully creates the block?

Yes (but that "person" might be a pool, and pools can set their own policy for fees).

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May 27, 2011, 03:34:37 PM
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There will be an equilibrium that occurs.  If there are few fees and everybody stops mining, somebody will say "ah screw it I can solve this block with my CPU and get a few bitcents, sure why not".  Plus the rarity of miners will cause a panic about the vulnerability of the system, so people will mine just for their own peace of mind about the strength of the network.  I don't think anybody should ever be concerned about the "there's no money to be mined!" problem.  I'm MUCH more concerned about a virus propagating deepbit.

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May 27, 2011, 04:50:47 PM
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There will be an equilibrium that occurs.  If there are few fees and everybody stops mining, somebody will say "ah screw it I can solve this block with my CPU and get a few bitcents, sure why not".  Plus the rarity of miners will cause a panic about the vulnerability of the system, so people will mine just for their own peace of mind about the strength of the network.  I don't think anybody should ever be concerned about the "there's no money to be mined!" problem.  I'm MUCH more concerned about a virus propagating deepbit.

I had thought about that myself. Infecting thousands of computers with miners which point to your wallet. Congrats bitcoin, you just made viruses even more profitable. Wink
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