Quote from: aleksej996 on January 14, 2018, 11:07:14 AM

Quote from: QuestionAuthority on January 13, 2018, 12:40:14 AM

ALL of the block reward and fees come from newly minted coins.

Uh...Would you care to explain please? Mining fees are payed from the inputs of the transaction. I am not that certain about the details of the protocol, but I do assume that these coins are funded to the miner's address with only one coinbase transaction that doesn't reference these inputs. So in a way, I would understand if that was what you meant, but the coins still practically from those old inputs.

Quote from: QuestionAuthority on January 13, 2018, 12:40:14 AM

Increasing fees (readjust the balance as you say) harms the mining industry because fewer people are willing to use bitcoin.

When I said "readjust the balance", I was referring to decrease of hashpower, not increase in fees, so I am not sure what you mean by this.
The balance I was referring to is the amount of hashpower that will be there in Bitcoin. If there are no transactions mining would go on, as miner's would still get the block reward, it is just that the hashpower will decrease.
And about the amount of people using Bitcoin and that harming miner's. well of course, this is the indirect factor I wasn't referring to.
If you have less transactions, it means you likely have less users, which means price of BTC goes down, which means the block reward is smaller.
But this is obvious and not something on a technical level that I was discussing.

Sure, I can explain that for you. Most things about bitcoin are not self explanatory or obvious. Fees incentivize miners to include transactions in a block. Once a transaction has been included in a block it is confirmed. Unconfirmed transactions sit in something called the mempool until they are confirmed. When you hit send on your client your transaction is sent to a bitcoin network node (a full client with a complete copy of the blockchain) and transmitted throughout the network (all of the full clients connected together). Miners can select (from the memory pool, ie. the nodes holding area) which transactions are included in blocks that they mine. Since miners want to maximize income, they will include transactions from the mempool that include higher fees.

I misunderstood what you meant by readjust the balance. Now I get you. In mining, theres something called the difficulty adjustment. The Bitcoin network difficulty is the measure of how difficult it is to find a new block compared to the easiest it can ever be. It is recalculated every 2016 blocks to a value such that the previous 2016 blocks would have been generated in exactly two weeks had everyone been mining at this difficulty. This will yield, on average, one block every ten minutes. A decrease in hash power simply means the difficulty adjusts to maintain the 2016-10 minute yield which has nothing to do with price.

If you have less transactions, it means you likely have less users, which means price of BTC goes down, which means the block reward is smaller. Let me address each part of that statement because there are a lot of components at play there.

The block reward is a fixed amount paid to a miner every block. By design, it cuts in half every 210,000 blocks or roughly every four years. It has nothing to do with fees.

Less transactions can simply mean people are sitting on their btc and not transmitting them to the network. It doesnt really have anything to do with the number of users. 10 users could send 100 transactions a day or 1000 users could send one and it would have the same outcome on the network.

Speculators are controlling the price of bitcoin. They buy and sell against each other in a really costly game of tug of war. The bitcoin price can be manipulated by thousands of dollars without necessarily needing very many transactions.

The size of a bitcoin block is fixed at 1mb. Our beloved Satoshi snuck a limit on the blocksize to 1mb and after he did it he said it was to control spam blocks on the network. Because Satoshi screwed us, only a limited amount of data (and so a limited number of transactions) can be added to a block at a time. With more and more people sending more and more transactions, the cost for getting into the next "block" of bitcoin transactions is getting higher and higher. Fees are going up because of Satoshis unilaterial decision to fix the blocksize. With so many people using bitcoin worldwide it would be almost impossible for the fee to reduce because some users stopped making transactions.

I know thats a lot of info that could possibly use a more in-depth explanation. I will be happy to do that for you if you tell me what part is unclear.