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If the mining reward was suddenly changed to 0, and there were no mining fees anymore, what would happen with the Bitcoin network? Assume there is another anti-spam measure in practice (ex: a tx would need the last block hash + some small PoW on top of it). Would Bitcoin suddenly collapse and get unusable, would it still operate normally due to voluntary mining?

MaiaVictor
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  • Possible duplicate of What will happen to mining after the 20 999 999th Bitcoin? – Jestin Jan 09 '17 at 22:03
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    I marked this as a duplicate because it's not a matter of if, but a matter of when, and there's already some good answers. – Jestin Jan 09 '17 at 22:05
  • @Jestin you're right, but my question was incomplete. I actually meant to ask what would happen if we removed any kind of mining reward, including fees. Basically, it is a thought experiment on which I want to know if the network could still operate safely solely with voluntary mining. I edited the question, could you remove the duplicate flag? – MaiaVictor Jan 09 '17 at 22:09
  • in that case this question may be a little to speculative for Bitcoin SE. This forum is best for questions with concrete answers, and not so great for thought experiments, speculation, or debates. It's too hard for the community to determine what a "good" answer is. – Jestin Jan 09 '17 at 22:15
  • Okay then, Jestin. – MaiaVictor Jan 09 '17 at 22:16
  • It's a somewhat interesting question, so I took a stab at an answer. Still, I wouldn't blame anyone for marking this as OT ;) – Jestin Jan 09 '17 at 22:32
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    This question is not useful. The reward is part of the core assumptions of Bitcoin that you might as well be asking what would happen to Bitcoin if there were no internet. – Murch Jan 10 '17 at 13:21
  • Okay then, Murch. – MaiaVictor Jan 10 '17 at 13:33
  • Well, in a way that's perhaps actually the answer that you're looking for: Without a reward either through fees or block subsidy, the incentives of miners to rather support the network instead of attacking it don't hold. Miners wouldn't have a reason to spend irretrievable resources when they have nothing to gain. You'd need a different incentive or public fund to step in, and that would likely lead to centralization and/or other degenerations. –– I.e. it breaks the game theory of the Bitcoin system. – Murch Jan 10 '17 at 16:56
  • @Murch but wouldn't large Bitcoin stake holders have an incentive to mine (at a loss) in order to protect the system? That is exactly what I'm asking: is it actually, factually known for sure that without the mining incentive the game theory is broken? I know the intuition strongly suggests that is that case, but has anyone actually proven it? Did anyone attempt to put a Bitcoin clone without the mining incentive? – MaiaVictor Jan 10 '17 at 20:09
  • @MaiaVictor: Perhaps you should consider to either edit this question or ask a new question along the lines of "Could Bitcoin work without block subsidy and transaction fees?" IMHO that's a much more interesting question than "what would happen if Bitcoin stopped having a block subsidy and fees tomorrow". :) I'd vote to reopen that, and would write an answer on that. – Murch Jan 10 '17 at 22:38
  • But there is already a good answer to the question as it is. I'll ask again. – MaiaVictor Jan 10 '17 at 22:40

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Even though they are still somewhat negligible to miners today, transaction fees play an important role in the protocol known as Bitcoin, and will play an increasing role in the future. Just look at all the questions this SE site gets about unconfirmed transactions. Asking how the protocol works when removing all direct mining incentives is redefining the protocol in a major way. It's like asking how HTTP would work if you remove the verbs from the protocol. At that point, it's something completely different.

When you remove such a critical part of the protocol, it's difficult to replace with something that works. For example, your proposal of doing a proof-of-work on top of the last block hash as part of the transaction will effectively break the ability to use the protocol for smart contracts.

You are essentially asking what happens if you remove critical parts of Bitcoin, but still use the basic idea rather than creating a new protocol to match your paradigm of no mining rewards. To that, I can only speculate that such a system is doomed for failure.

Jestin
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