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What do you mean by "not enough to incentivize mining"? Mining works on a system where the fewer miners there are the larger a portion of the total transaction

by fogof 6y ago

What do you mean by "not enough to incentivize mining"? Mining works on a system where the fewer miners there are the larger a portion of the total transaction fee share each miner gets. Even if the there were no exchanges or people sending transactions, I'm sure there would be at least a few nerds who would mine on their desktop computers for shits and giggles. A better criterion would be "when transaction fees aren't worth enough to incentivize enough mining to keep the network secure". But even that isn't a very clear concept because you can always just wait longer for more blocks to confirm.

camjohnson26 6y ago
Well if the hash rate drops far enough all that unused ASIC firepower could easily fork the network a million different directions and transactions would take forever to get through, I don't think waiting would produce that much more security because the real chain getting mined on the desktops would be a lot shorter than the ASIC mined ones.
PeterisP 6y ago
There is a particular risk, unlikely but theoretically possible, that I'm thinking of here. In case of a sudden huge decrease of BTC price for a whatever reason, the cost of electricity for mining would become much larger than the cost of all the expected reward (the newly mined part plus the txn fee part). If such a situation would cause major miners cease mining, then there's a gap where there's a lot of unprofitable [proof of] work too be done until the next hash difficulty adjustment, which happens every 2016 blocks - which usually should be roughly every two weeks, but if there's a large sudden hash rate decrease, then it can take months to mine those blocks, the adjustment won't happen until (unless!) someone sacrifices something like 100 million dollars in electricity costs to mine the remaining blocks while the difficulty rate has made it unprofitable at the unexpectedly lowered BTC price - and, of course, the impact of that hashrate drop would make BTC transactions very slow and act as a further downward push on BTC price. TL;DR - there's a mechanism where a sudden large, rapid drop in BTC price might perhaps cause a sustained collapse of BTC price.
- cesarb 6y ago
  > There is a particular risk, unlikely but theoretically possible, that I'm thinking of here. [...] TL;DR - there's a mechanism where a sudden large, rapid drop in BTC price might perhaps cause a sustained collapse of BTC price. This scenario is known as the "chain death spiral". When BCH forked from BTC, the BCH backers hoped to cause a death spiral on the BTC chain, so that it would die and be replaced by the BCH chain, the later having a modified algorithm which adjusted the hash difficulty faster. IIRC, they failed for two reasons: first, there was a large enough group of miners which didn't defect and stayed on the BTC chain even while the BCH chain was more profitable, keeping the hash rate high enough that the difficulty adjustment kept working; second, the faster difficulty adjustment of the BCH chain led it to oscillate between long periods without any block and periods in which many blocks were mined very quickly, most of them empty. IIRC, this ended when the BCH chain hard forked again to change its difficulty adjustment to one which didn't oscillate as much; however, the hype caused by all this mess (whoever had Bitcoin had doubled the amount of coin they had! Of course, half of it was BTC and half of it was BCH) led to an increase to the price of Bitcoin (and a few more forks).

by fogof 6y ago

camjohnson26 6y ago

Well if the hash rate drops far enough all that unused ASIC firepower could easily fork the network a million different directions and transactions would take forever to get through, I don't think waiting would produce that much more security because the real chain getting mined on the desktops would be a lot shorter than the ASIC mined ones.

PeterisP 6y ago

There is a particular risk, unlikely but theoretically possible, that I'm thinking of here. In case of a sudden huge decrease of BTC price for a whatever reason, the cost of electricity for mining would become much larger than the cost of all the expected reward (the newly mined part plus the txn fee part). If such a situation would cause major miners cease mining, then there's a gap where there's a lot of unprofitable [proof of] work too be done until the next hash difficulty adjustment, which happens every 2016 blocks - which usually should be roughly every two weeks, but if there's a large sudden hash rate decrease, then it can take months to mine those blocks, the adjustment won't happen until (unless!) someone sacrifices something like 100 million dollars in electricity costs to mine the remaining blocks while the difficulty rate has made it unprofitable at the unexpectedly lowered BTC price - and, of course, the impact of that hashrate drop would make BTC transactions very slow and act as a further downward push on BTC price. TL;DR - there's a mechanism where a sudden large, rapid drop in BTC price might perhaps cause a sustained collapse of BTC price.

cesarb 6y ago
> There is a particular risk, unlikely but theoretically possible, that I'm thinking of here. [...] TL;DR - there's a mechanism where a sudden large, rapid drop in BTC price might perhaps cause a sustained collapse of BTC price. This scenario is known as the "chain death spiral". When BCH forked from BTC, the BCH backers hoped to cause a death spiral on the BTC chain, so that it would die and be replaced by the BCH chain, the later having a modified algorithm which adjusted the hash difficulty faster. IIRC, they failed for two reasons: first, there was a large enough group of miners which didn't defect and stayed on the BTC chain even while the BCH chain was more profitable, keeping the hash rate high enough that the difficulty adjustment kept working; second, the faster difficulty adjustment of the BCH chain led it to oscillate between long periods without any block and periods in which many blocks were mined very quickly, most of them empty. IIRC, this ended when the BCH chain hard forked again to change its difficulty adjustment to one which didn't oscillate as much; however, the hype caused by all this mess (whoever had Bitcoin had doubled the amount of coin they had! Of course, half of it was BTC and half of it was BCH) led to an increase to the price of Bitcoin (and a few more forks).