Post
Topic
Board Bitcoin Discussion
Re: where does transaction fees go to
by
shyich03
on 16/11/2016, 23:17:42 UTC
Once all the bitcoins are mined in 2140, it's usual that newbies question where will be the transactions fees go at... well it will continue the same as it is now, but the miners will only get the fees, they will not get the generated coins. There is an ongoing discussion about how by 2140 there will not be enough incentive for miners to keep mining because of that... I would like to know more.

There are a few factors which could help miners remain profitable by the time when the future halvings bring the rewards to nothing. First, if Bitcoin price increases manyfold, the miners profits may actually increase in fiat terms even despite the reward being halved with each halving iteration. This is exactly what happened with this year halving. Miners reward dropped from 25 down to 12.5 bitcoins, but since the Bitcoin price increased more than three times within the period of just one year, 12.5 bitcoins now cost more in dollars than 25 bitcoins were worth over a year ago. And second, if Bitcoin gets worldwide traction and its userbase expands exponentially, the number of transactions processed will increase in similar manner. Since miners earn on almost every transaction they include in the block they find, the fees they get may also grow dramatically, thereby totally offsetting the lack of mining rewards...

As you can see, it all primarily depends on two factors, i.e. Bitcoin price and Bitcoin adoption
so only 1 block is mined out every 10 minutes? If thats the case, can 1 block be mined by multiple miners or just one? or say, is there only 1 miner that profits with each new block?

It is sort of both - only one "entity" can be the first to mine a block, but many individual miners can work together in pools, appearing to the network like one large miner; when a pool mines a block the rewards are awarded to the pool and then shared amongst the miners who contributed work to the pool.
I am guessing miners join a pool in order to get paid more consecutively and get more stable income from mining. but even with pooling, it feels like the profit is greatly dependent on luck, since you either get some coins every 10 minutes, or you don't. There's no where in between. in addition, only a small portion of miners will earn income with each block mined.