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What happens to the bitcoin network when the miners all stop, years in the future after all the bitcoins have been mined? How will the network continue to function? Won't bitcoins then be useless? What would be the incentive for an individual to continue using computational power to service all the transactions? Isn't this like a ticking time bomb or is there something I'm not getting?
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Bitcoin becomes very insecure if miners stop mining. Think of how easy a 51% attack would be to pull off.
However, I disagree with your assumption that miners will stop. And certainly that if Bitcoin dies it would be because miners stop. I would instead think that miners would only stop if something else already killed Bitcoin. Bitcoin is designed to always give miners an incentive to keep mining and secure the network. If miners don't have an incentive to mine, then Bitcoin has already failed.
Many mining pools don't pay out income from transaction fees and the whole thing is often glossed over. But mining income is newly minted coins PLUS fees from the transactions you include in the blocks you generate.
Have a look at the tx fee statistics at http://blockchain.info/no/charts/transaction-fees
As I write this at the end of march 2013, it looks like tx fees were about 4 BTC per day a year ago and are now about 50 BTC. At the same time the newly minted coins in each block has dropped from 50 BTC to 25 BTC.
With 6 blocks per hour this means one year ago we mined 7200 BTC in new coins and 4 BTC in fees per day. Now we mine daily 3600 BTC in new coins and 50 BTC in tx fees. So tx fees went from being 0.00056% of the income a year back to the 1.39% of mining income they are today.
I'm sure you can see where this is going. No, mining does not stop when the minting of new coins stops.
1I don't see how variable transaction fees can scale. I go to a merchant's website to buy, how do I select a mining peer to pay transaction fee to? Do I attach some bounty that any peer can earn if that peer wins the Proof-of-Work block? But what if my bounty isn't high enough to attract a peer given high transaction volume competing for priorities? This sounds very complex and unreliable and not at all like something that can scale to customers. Customers want to click one button and be done with the purchase and not waiting unknown hours debugging their payment processing. Amazon's One Click. – Shelby Moore III – 2013-03-27T23:33:21.850
I will wait for a reply to clarify before I decide if I will downvote. – Shelby Moore III – 2013-03-27T23:33:41.993
No one has given an answer to refute my question claiming that market-based transaction fees won't scale, thus I am downvoting you.
4How gracious of you to give me 1 hour to answer before you downvote. I have now placed my answer with the question you link to above. – Dr.Haribo – 2013-03-28T14:01:54.917
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They won't ever stop!
For now they get the block rewards, but they halve every so many blocks. (can be changed but is unlikely to)
Later they will receive rewards that people put on transactions. It's still unclear how high those fees will work out to be. Likely all transactions will carry some very small fee, and miners will keep up the hard work to earn those fees.
I also expect "green addresses" to play a much bigger role in the future. Those addresses' transactions will be "certainly good", given they are owned by trusted parties.
I thought about rewards in the form of transaction fees too. Even you say "It's still unclear how exactly that will work." I know this is thirty years in the future and technology will have changed exponentially to say the least, but this seems like something important for the entire model of cryptocurrency. Why will miners work hard if they are not profiting for their efforts and a level worth the effort? I still don't really get it, though I figure there are a few solutions that may present themselves by then. – Demioprax – 2013-03-26T22:26:20.750
Block reward will never change (changing it = you create a new protocol that's not bitcoin). And I don't get whats "unclear" about transaction fee? Today transaction fee make up a significant part of miners reward, and in the future we will probably see way more transactions = more fee to the miners. Also with ASICs, you can run a very powerful and energy efficient miner (so no reason not to have the ASIC running 24/7). – Nicolai – 2013-03-26T23:32:18.990
Nicolai, changing the amount or shape of the block reward is a technical change that is no different from previous protocol changes. The transaction fee's heights are still unclear, and what will happen with lower payed transactions. ASICs are not relevant to this discussion, the exact technology does not matter at all. I see potential for a future with a steady blockreward (no fixed maximum Bitcoins). – Lodewijk – 2013-03-26T23:37:28.087
Changing block reward / the 21M limit is too big a change to still call the protocol "bitcoin". In that case you could create a fork called "x-coin v2" but it wouldn't be bitcoin. Also, I still can't see what is "unclear" about transaction fee? If you don't pay a transaction fee, then the miner has no reason to include your transaction (other than helping the network aka "being a good guy"), some miners will still include free transactions, but you will expect long transaction times. ASICs will mean that for few money (electricity) we can run a powerful network (difficulty). – Nicolai – 2013-03-27T01:14:49.707
If the technology gets better, the price per hash goes down and the defense needs a much higher hashrate to be safe. ASIC's high entry price makes it a slighly better defense than GPU's. You are also arguing semantics with calling it Bitcoin or not. It is still practically as Satoshi wrote it, still the bitcoin protocol. The Bitcoin is changed only a little. There may be other incentives to include transactions, like being a Bitcoin service provider. It is also possible there will be no strict minimum fee, which makes fees unclear to say the least. – Lodewijk – 2013-03-27T12:37:27.460
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Miners will have to decide whether
(a) might seem like the obvious choice, because it costs the same amount of time and computing power to verify a small transfer as a large one. On the other hand, (b) has the attraction that it encourages more transactions, and therefore more fees to be earned over all. (Assuming bitcoin operates like a normal currency, there are always going to be more small transactions that people want to make than large ones, but on the other hand people will not make a transaction if a large percentage of the money transferred is eaten up in fees, so a fixed fee would operate to prevent small transactions i.e. the majority of potential transactions.)
Maybe the ultimate answer will be some sort of sliding scale, with a minimum fee, and then a percentage being charged that will vary downwards as the amount being transferred increases.
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A lot will change in the crypto space before the last Bitcoin is mined. The revolution is DLT (Distributed Ledger Technology), not blockchain. Blockchain is merely the form of DLT that Bitcoin uses. The drawback to blockchain is that the network must wait 10 minutes before adding each consecutive block. This is to ensure that multiple computers do not add the same transaction to the blockchain at the same time. This is the primary purpose of the minors. This is also why the mining difficulty is always increasing. The network must always have a ten minute pause between each block.
If the miners only receive transaction fees for validating transactions then the people using Bitcoin will ultimately decide how much money they are willing to spend on transaction fees, verses using something else. Many miners will likely quit, thus driving down the cost of mining to the point where those who remain will profit.
So, to answer your question, because the network will always need a 10-minute pause between blocks, the only way Bitcoin will fail from miners quitting is if the transaction fees become so low you can't get enough miner to prevent a 51% attack.
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When last miner stop mining, then I will be the miner. When last doctor stop curing people, then I will... ętc.
Miners are also getting fee for transaction.
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One of the answers I read above hit the nail on the head for me. The innovation that cryptocurrency is responsible for is 'Distributed Ledger Technology' (DLT). And as was said above, the 'Blockchain' is simply one form of such a thing. In my opinion, Bitcoin and its Blockchain are together, just a prototype that provides proof-of-concept for the 'proof-of-work' algorithm. What I'm hinting at is the inevitability (in my mind) that Bitcoin and its Blockchain (BaiB) will be superseded by something a lot more suitable for international transactions, finance and banking. I now believe there is no 'one-size-fits-all' when it comes to DLTs and particular use cases. BaiB would be the perfect solution for government record keeping, tax records for companies, expense accounts, payroll, etc. but, Ethereum has proven itself an amazing innovation with its own set of revolutionary capabilities. Then, there's IOTA, a coin that has deployed an amazing innovation for DLT, that being something called a 'Direct Acyclic Graph' (DAG). This DAG is far more suitable as a global payments solution than BaiB as there is no transaction fees on the network, no mining required and the transactions are instant. I can't see how Bitcoin will go about surviving in an atmosphere evolving so quickly!
Welcome to the BTC SE! Your answer is more an opinion of which cryptocurrency will be most important in the future, than an answer to "what happens to the btc network when all the coins are mined". Just fyi, the BTC SE aims to be an objective Q/A posting board, more than a discussion forum of opinions. I hope you'll find some interesting info on this site, and continue contributing as well :) – chytrik – 2018-01-13T22:27:36.337
There is a similar question which is a community wiki.
– Shelby Moore III – 2013-03-27T21:34:20.373Related: http://bitcoin.stackexchange.com/questions/5275/what-will-happen-to-mining-after-the-20-999-999th-bitcoin
– Highly Irregular – 2013-03-28T02:37:14.980