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Comment by saas_co_de | Hacker News Reader

The way I understand it bitcoin is guaranteed to go to zero by design because there is a fixed limit on issue and so eventually there will be no incentive to mine and the network will collapse.

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Actually Bitcoin has transaction fees for exactly this purpose. The idea is that once all the coins are mined the primary way that miners make money is from the fees that people pay to miners to get their transactions recorded in the blockchain.

For reference a lot of times you currently have to pay a fee of >$10 to get your transaction recorded in the blockchain, and estimates of around $10 million a day in transaction fees go to miners.

Of course its questionable whether fees can actually support the ecosystem, but it is designed into the system.

Yes, miners will receive transaction fees. But have you run the numbers on how much those transaction fees would have to be to match the current block reward?

The endgame seems completely untenable. No one is going to pay a huge amount per BTC transfer. So what do you think will happen to all those miners, with all their mining equipment?

We currently have a monstrous block reward every 10 minutes, and yet tx fees are already $10 to $20. Imagine how much the fees will be when there's no reward.

If I understood the system correctly, at that point mining would become much less profitable so a lot of miners would stop their operations. In that case, difficulty would automatically decrease at the same rate as miners quit, and at some point it would become somehow profitable for the remaining miners to subsist on transaction fees.

Note that difficulty adjustment happens every 2016 blocks. If the miners all decide to call it quits shortly after the previous difficulty change, the next 2016 blocks might take far longer than 10 minutes per block.

Which of course means the next difficulty adjustment would take far longer than two weeks to trigger.

> questionable whether fees can actually support the ecosystem

right now every block pays 12.5 coins, which even with current low prices is around $145K.

The average transactions per block looks like around 1,800 (https://blockchain.info/charts/n-transactions-per-block) which puts mining revenue per transaction at around $80, on top of which miners also get the transaction fee.

With no more mining where is the other $80 going to come from?

More to the point, who in their right mind would ever use a transaction processing system that charges $80+ per transaction?

What happens when you have a fixed currency stock and every transaction requires paying some of it to the transaction processors? Seems pretty unsustainable to me.

> With no more mining where is the other $80 going to come from?

Are you asking where transaction fees come from?

Well, if PayPal earns $3 when I use it to send you $100, where did that $3 come from? The truth is that I sent PayPal $103, PayPal kept $3, and you got $100. (These numbers are probably not exactly correct; I don't know what PayPal's actual fees are off the top of my head.)

So the transaction fee comes from the person that made the payment.

If what you're saying is that this means that miners will be able to accumulate all the BTC… well, yes, but that's what happens now. When you buy BTC, you are buying something that, at one point or other, was initially owned by a miner. So yes, miners could bring the whole system down if they just accumulate all the BTC for themselves, but they could already do that now, and they don't - instead they trade that BTC for fiat or (nowadays, perhaps) other cryptocurrencies, so it begins to circulate to others.

You understand wrong. And are naive to think that such a simplistic flaw would not be considered by the substantial number of intelligent programmers involved in the Bitcoin project.

The transaction fees on the network are incentives for miners to pass transactions in addition to block rewards.

Appeal to authority is one of the most naive arguments out there... especially when it's to some programmers attempting to design an economy

Appeal to authority is a logical fallacy--you cannot use appeal to authority to create a rigorous argument. I agree with that.

But you can gain some idea of probability that something is correct or incorrect. For example, if 99 of 100 doctors agree that vaccines do not cause autism, that does not necessarily mean that vaccines do not cause autism. But chances are really good that the 99% of doctors are correct.

Nice job giving the formal name of a logical fallacy, though. Adds a lot of credibility to your argument!

Saying 99/100 doctors think something medical is true isn't an appeal to authority... Doctors /are/ an authority on medical matters. Programmers aren't an authority on economic matters.

That is exactly an appeal to authority and logical fallacy. It doesn't mean it isn't a helpful short cut in decision making, but it is logically incorrect. There was a point in time when enough scienticians believed that the world was flat. Regardless of their expert belief and number, the world was not flat, nor was it the centre of the universe. Facts remain regardless of what 99/100 people believe.

The block reward is not the only incentive to mine. Users also pay miners with a transaction fee.

The whitepaper is short and very approachable ;)

https://bitcoin.org/bitcoin.pdf

How does the myth stick around so much? The original design from the start has always avoided this issue: miners collect transaction fees too.

The plan is that transaction fees will incentivize mining after all the bitcoins have been minted.

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