I often wonder about this as well. How the fees will be regulated after the bitcoin protocol's block reward is negligible? I think OP has made the assumption that the BTC fee volume stays constant. As far as I am aware, this is not the case. If it was the case, then their would not only be a correlation between BTC price and transaction fee (which insinuates some variance) but it would actually be a linear function, such that:
transaction fee = BTC fee volume (constant) * BTC price
either that, or I have missed something in the conversation.
Having said that, what are the driving forces for BTC fee volume?
I imagine that there is the amount of transactions that are being posted to the mempool. Therefore people would compete with higher BTC fee volumes to have their transactions posted first. but then what if there was a dip in transactions posted to the mempool and the fees drop?
In the future when the block reward is infinitesimal and the fees drop, then the miners are getting less money. Which would cause them to lower the hashing power (electricity spend) on the network. Would that lower the security of the bitcoin protocol?
So in the future, would it be that the fees should be regulated by the amount of money that the community believes should be spent on securing the network. Given that there is about 3000 transactions. It would be how much we want to give the miners in order to secure the network such that our storage of value is protected from 51% attacks etc.
What would that figure need to be, to ensure a secure creation of new block? if we know that, then we can divide that by the amount of transactions in a block and that would be the fee. Right?
transaction fee = BTC fee volume (constant) * BTC price
either that, or I have missed something in the conversation.
Having said that, what are the driving forces for BTC fee volume?
I imagine that there is the amount of transactions that are being posted to the mempool. Therefore people would compete with higher BTC fee volumes to have their transactions posted first. but then what if there was a dip in transactions posted to the mempool and the fees drop?
In the future when the block reward is infinitesimal and the fees drop, then the miners are getting less money. Which would cause them to lower the hashing power (electricity spend) on the network. Would that lower the security of the bitcoin protocol?
So in the future, would it be that the fees should be regulated by the amount of money that the community believes should be spent on securing the network. Given that there is about 3000 transactions. It would be how much we want to give the miners in order to secure the network such that our storage of value is protected from 51% attacks etc.
What would that figure need to be, to ensure a secure creation of new block? if we know that, then we can divide that by the amount of transactions in a block and that would be the fee. Right?
I think the point you bring up on bitcoin's blockchain security is interesting. Lower rewards mean a lower incentive to mine. And rewards are going to be near zero after some point too.
The monetary incentive from that point on would be fees. Lower or close to absolutely no block rewards also increase the interest miners have in the maintaining of a fee market.
So paradoxically, after that time before 2140 comes, parties that transact BTC will be providing the sole monetary incentive to upkeep the safety of bitcoin's chain. But a conflict here is that the same parties will also want cheap transactions.
The points in the OP are quite clear cut for a hypothetical. As isolated variables there's a perfect correlation between price and fee value.
The correlation is also proven to exist in bitcoin's real world usage as I showed charting years of data. So no need to keep trolling this thread.
I don't think it's safe to predict that fees would be lower at that point though. Neither in terms of monetary value nor in terms of sat/byte.
Who knows what bitcoin would be at that point. But if we're to assume that it'd be close to today's technical standard, then I think that parties operating mining equipment would have more bargaining power. Even with potentially higher adoption, altruistic miners would be the contributing force for how high expensive it would be to attack bitcoin. It would then be in the hands of the users to keep providing some incentive to miners so they can sustain their operation better and make it more attractive. Lower fees at that point could potentially mean less security for all.
Nice comic though.
