Quote from: justusranvier on June 22, 2015, 06:18:05 PM

Quote from: Adrian-x on June 22, 2015, 06:00:59 PM

I will agree that market based fees are a fallacy while block subsidies are so high, but we're talking Bitcoin not just the situation today. Vitalik isn't the best free market economics annalist I've ever read. Bitcoin fees are set up to be a market system and its not a fallacy. Miners today can ignore the market because there reward is subsidized by 25BTC, but once this diminishes significantly the fees become all important. I've also pondered long and hard as to why fees are a monetary unit and not a percent, and I've come to the same conclusion as satoshi that it needs to be a free market fee ranging from 0 to the total value of the economy.

Miners that ignore the macro economic data will not optimize and will either go bankrupt here are just the obvious ways fees will be optimized: mining no free transactions (blocking free transactions = less velocity and lover value fees), or mining too many free transactions (subsidizing the Bitcoin velocity = less income and marginal benefit in value of fees) or mining block with insufficient transactions (over priced transaction fees = blocks too small) or mining blocks with too many transactions (under priced on average = blocks too big and orphaned) the market will find an equilibrium and it will happen at a pace that miners can plan and test, basically miners have a constant view of the situation as the urgency for planing is kept in sight by the forced block halving every 4 years.

The block subsidy really does distort mining, just like every other subsidy does in its respective market. The economics of Bitcoin mining are going to make a lot more sense once the block reward shrinks to negligable levels, or once the transaction volume grows large enough to render the reward negligable and thus the distortion insignifigant.

The first criteria is something over which we have no control - we just have to wait.

The second is something we can do something about.

Subsidies are great if you want to get applicants who qualify, It should be called a subsidiary not a reward for good reason, the problem is there are developers who feel the economics are wrong and Bitcoin needs to be fixed, I may not be able to express why but to my understanding the mechanism seems well balanced and considered in my view, the onus is on the people who have a problem with how Bitcoin works to prove its broken, and build a better mousetrap not change this one.