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9. Bitcoin has a mining system that produces a maximum number of 21 million coins at the end. Its really not clear what the long term viability of

9. Bitcoin has a mining system that produces a maximum number of 21 million coins at the end. Its really not clear what the long term viability of this exponential drop in mining activity will be and whether it will cause problems in time. This last point is completely wrong I think. There won't be an "exponential drop" in mining activity, because mining rewards exponentially decay anyway, so the system involves no sudden changes at all.

conception 13y ago
Plus miners get them transaction fees.
iamjustin 13y ago
There may not be any sudden changes in the rewards, but that doesn't change the fact that the rewards are decreasing, and with more people involved, the competition is increasing. It's also pretty much impossible to CPU mine anymore, and with the addition of ASICs to the mining pool, even running a GPU miner is no longer profitable after calculating electricity costs. I understand that you don't have to be mining to assist in verifying transactions, as simply running the bitcoin-qt client aids processing of transaction, but there no longer is a financial motivation to do so. With an increase in the rate of transactions as the Bitcoin market continues to grow, it seems that the transaction speed will certainly slow down, and the security of the network will decrease. If there is anyone here that can explain to me why I shouldn't be worried about this situation, I'd absolutely love to hear it. I'm bullish on Bitcoin, and I think there is still a good future for the currency, but I'm worried...
- zvrba 13y ago
  > I understand that you don't have to be mining to assist in verifying transactions, as simply running the bitcoin-qt client aids processing of transaction, but there no longer is a financial motivation to do so. Indeed, what will happen if most of the people end up firing up their bitcoin-qt client only to do a transaction, and shut it down immediately after?
- sfjailbird 13y ago
  Miners will make money from transaction fees. As with everything else in the bitcoin protocol, this is a beautiful self-regulating mechanism: Transactions attach a fee of any size (or no fee), to motivate miners to process the transaction. If there were to be fewer miners to the extent that transaction time becomes a problem, people will attach higher fees to transactions to get them to complete quicker, which increases the profit from mining, which makes more people want to mine, etc. etc.
  - iamjustin 13y ago
    The transaction fees go to the miner who originally created the block, not just any miner who processes the transaction, and with increased difficulty to find new blocks, it's less likely for new miners (without paying for some really nice hardware) to ever see a cut of the transaction fees.

conception 13y ago

Plus miners get them transaction fees.

iamjustin 13y ago

There may not be any sudden changes in the rewards, but that doesn't change the fact that the rewards are decreasing, and with more people involved, the competition is increasing. It's also pretty much impossible to CPU mine anymore, and with the addition of ASICs to the mining pool, even running a GPU miner is no longer profitable after calculating electricity costs. I understand that you don't have to be mining to assist in verifying transactions, as simply running the bitcoin-qt client aids processing of transaction, but there no longer is a financial motivation to do so. With an increase in the rate of transactions as the Bitcoin market continues to grow, it seems that the transaction speed will certainly slow down, and the security of the network will decrease. If there is anyone here that can explain to me why I shouldn't be worried about this situation, I'd absolutely love to hear it. I'm bullish on Bitcoin, and I think there is still a good future for the currency, but I'm worried...

zvrba 13y ago
> I understand that you don't have to be mining to assist in verifying transactions, as simply running the bitcoin-qt client aids processing of transaction, but there no longer is a financial motivation to do so. Indeed, what will happen if most of the people end up firing up their bitcoin-qt client only to do a transaction, and shut it down immediately after?
sfjailbird 13y ago
Miners will make money from transaction fees. As with everything else in the bitcoin protocol, this is a beautiful self-regulating mechanism: Transactions attach a fee of any size (or no fee), to motivate miners to process the transaction. If there were to be fewer miners to the extent that transaction time becomes a problem, people will attach higher fees to transactions to get them to complete quicker, which increases the profit from mining, which makes more people want to mine, etc. etc.
- iamjustin 13y ago
  The transaction fees go to the miner who originally created the block, not just any miner who processes the transaction, and with increased difficulty to find new blocks, it's less likely for new miners (without paying for some really nice hardware) to ever see a cut of the transaction fees.