> Its a value redistribution by diluting all the existing holders of bitcoin. Bitcoins may be created out of thin air, but the value that makes them a reward is

> Its a value redistribution by diluting all the existing holders of bitcoin. Bitcoins may be created out of thin air, but the value that makes them a reward is not. What's your point? I said so in my post. Maybe I'm missing something. We're both saying the same thing, which means that this value dilution is not actually a transaction cost. It happens regardless of whether any transactions are made. And it's similar to the dollar, in that daily/yearly new money supply dilutes the value of all dollars. Bitcoin isn't unique. It's only unique in that this new money supply eventually ends, while the dollar and any other currency keeps diluting forever. > Which means that to continue to give miners an incentive to validate transactions, actual transaction fees will have to pick up the slack of providing value as the block rewards decline. Agreed. And that can easily happen. Bitcoin is very tiny, it's maybe used on average like once a month by 1 million people. It can easily scale 100x in use case, meaning 10 million people use it every few days. It'd still be tiny. But if that'd happen, the price would likely be at least 10x higher. At that point you could literally cut out all block rewards, the transaction fees (in the pennies) would already be enough to pay for the miners. And seeing bitcoin, a global currency, scale to 10m users in the next few decades as mining rewards taper off, is a very very tiny expectation. If it can't even do that, then who cares if the economics work out, nobody wants to use it anyway. But if it scales because people want to use it, to 10m people or 100m people or even to the order of the billions of users that people like Marc Andreessen think it could be used by one day, then block rewards are completely unnecessary, and you can pay miners a shit ton of money on transactions that cost pennies. And again, if it doesn't scale because nobody wants to use it, then who cares if block rewards go to 0 and suddenly transaction fees have to be $20 per transaction... It's like saying 'if by 2015 typewriters won't be used by millions of people, they will become super expensive'. It's completely irrelevant. Nobody cares. And if it does scale, you can keep transaction fees cheap and pay miners with larger volumes of transactions.