Quote from: Bizmark13 on March 17, 2015, 03:49:27 AM

Quote from: rexxarofmoknathal on March 17, 2015, 03:03:51 AM

So if the rewards for a miner is only the transaction fees (which we assume will be decreased further) then the price of bitcoin would have to be really high relative to today's in order for mining to be profitable? What sorts of price levels would we be talking about?

The default transaction fee can be adjusted as the value of BTC dips and rises. If the BTC price drops to $10, it could be made higher. If it skyrockets, it could be made lower. Furthermore, what we call the "default transaction fee" isn't really enforced on a protocol level. It's just the fee that is recommended by the reference client and you can choose to include a higher or lower fee with your transactions if that is what you prefer. Miners aren't tied to it either as they can choose to reject transactions with a fee less than x BTC where the value of x may or may not be the default transaction fee.

The price of a single bitcoin in terms of fiat shouldn't make a difference as to whether or not mining for transaction fees is profitable. If the BTC price is low, a miner might get 0.5 BTC (maybe worth $10) from fees. If the BTC price is high, the same miner might get 0.0005 BTC (still worth $10) instead.

Mining works in a way that if it's too unprofitable and too many people start leaving, then the difficulty will adjust so that mining becomes easier. If it's too profitable and too many people start entering, then the difficulty will adjust so that mining becomes harder.

Additionally the total number of transactions per second also matters. More transactions would make a average lower transaction fee possible since miners would still get the same block reward. The total number of transactions per second should be higher once Bitcoin is mainstream.