2

So if I'm not wrong, the proof of work is the way to validate all the transactions in a Block. The miner gets (at the moment) 12,5 Bitcoins as a reward for each validated block. So my question is:

what happens when almost all the bitcoins have been mined and there are no miners in the system? who's gonna be there to validate the transaction blocks? (21Milloin bitcoins is the limit, so there will be someday such a big proof of work to mine that it won't be worth it, I think everyone's gonna stop mining). will the system still be working as it is right now?

Anas Bouayed
  • 23
  • 1
  • 3
  • https://bitcoin.stackexchange.com/questions/5275/what-will-happen-to-mining-after-the-20-999-999th-bitcoin – Anas Bouayed Jul 01 '17 at 09:17
  • @MeshCollider thanks for the links but it doesn't really answer. Because in my opinion when there will be fees for any and every transaction (which will be the reward for the miners after "all" the BCs have been mined) is goning to be sort of a discouraging point, knowing that it's one of the reasons why people are looking for a alternative to traditional banking system (where they now start charging everything like even getting cash from ATMs) – Anas Bouayed Jul 01 '17 at 12:28
  • 1
    @Anas just because you dislike the answer doesn't mean the question is not a duplicate. Perhaps you should comment on one of the answers there rather than opening a new question? – Pieter Wuille Jul 01 '17 at 16:43
  • @AnasBouayed: The answers address your question. If you're interested in getting more input on whether transaction fees will cause Bitcoin network to fail, that seems like it should be a new question, although it is already discussed on https://bitcoin.stackexchange.com/questions/3111/will-bitcoin-suffer-from-a-mining-tragedy-of-the-commons-when-mining-fees-drop-t to some degree – Murch Jul 01 '17 at 19:04

1 Answers1

2

The reward for a miner when it finds a new block is already composed of the subsidy (currently 12.5 BTC) and sum of transaction fees that the miner included into the block. If you look at the blockchain right now, the minimum transaction fee sum of last 3 blocks was 0.5075 BTC. This means that much sooner than before last bitcoins are mined (i.e. reaching 21M cap) the part of the reward from transaction fees will be much greater than the subsidy itself.

After next halving, the subsidy will be 6.25 BTC, then 3.125 BTC, ... and after 7 halvings, the subsidy will be less than 0.1 BTC. And this is going to happen in cca 30 years (while the last bitcoins will be mined in more than 120 years). So much sooner than what you are referring to, the transaction fees will become major dominant part of the reward.

At any point of time, miners will only stop mining if that stop becoming profitable for them. So currently, the reward from a block is about 12.5-14 BTC, which translates roughly to $31k per mined block (at current difficult over 700G). So many different scenarios can play out in 30 years. For example, price per 1 bitcoin can raise from $2.4k to $50k. At that point, if subsidy is 0.1 BTC and sum of transaction fees are just 0.5 BTC, you've got 0.6 BTC total reward, which would translate to $30k. That might be enough if difficulty stays at 700G and prices of electricity stagnate as well, or of hardware mining chip technology advances and provides better cost per hash (very likely to happen), or it might not be enough if electricity cost or difficulty goes up a lot, ...

But every transaction in the ecosystem already has to pay a fee. That will become more and more important over time as the subsidy goes down. That does not mean the cost for end user will go up. It may temporarily, but new scaling solutions are coming and are promising to reduce the need for on-chain transactions for small payments.

Also, the blocks are going to be bigger, which means more transactions will be allowed to a single block, which could mean higher reward for miners from the fees.

So many different scenarios are possible, it is impossible to predict what exactly will happen, but the sole fact of lowering subsidy is not a big problem. To answer your final question - yes, the system still can work as it is now, even after 30 years, and even after all bitcoins are mined.

Wapac
  • 1,074
  • 7
  • 16
  • I know that you wrote that the 0.5 BTC was a minimum, but perhaps we should also note that there were 3 blocks with more than 3BTC fees in the past fifty, and 16 more than 2BTC. http://bitcointicker.co/latestblocks/ ;) – Murch Jul 01 '17 at 18:02
  • Yeah, I was not looking at the upper side. Certainly a fee analysis over blocks mined in last couple of weeks could be very interesting. And it should also be noted that my intention was to talk about full blocks (these days many blocks are smaller than max size) as we can certainly see non-full blocks that carry just small fees. – Wapac Jul 03 '17 at 07:49