Quote from: jabo38 on December 07, 2014, 05:54:26 AM

Quote from: jonald_fyookball on December 07, 2014, 04:39:45 AM

I think you might be slightly confused.

First of all, the "dilution" you speak of happens regardless of the price of Bitcoin, who is mining, how much they are spending on mining, etc.
New bitcoins are being released according to the protocol -- there is a steady, predictable rate of inflation and issuance.

Yes, it is steady and predictable and I can even use that prediction into my evaluation of how much a bitcoin should be worth. But just because it is steady and predictable doesn't mean it is not a dilution. It is still a dilution and that dilution which is essentially a tax on all previous bitcoins is still subsidizing miners. It is just a predictable dilution instead of a random one.

Quote from: jonald_fyookball on December 07, 2014, 04:39:45 AM

Second, you say it "doesnt seem sustainable", but what are you basing that on? You have to remember that
supply and demand set the price of Bitcoin, and everything else follows. Miners are claiming $1.3M/day in
block subsidies (and the same amount is being spent on security)
because that's how much Bitcoin is worth right now.
Competition is going to make sure that happens.

If the subsidy reward were cut in half today to 12.5 BTC and the price didn't increase,
it would only be $680,000/day. Competition would force some miners out.
The network hashrate and difficulty would drop.
But it would still be enough to secure the network.

And then what if it halves again to $340,000 and then again ton $170,000 and then again to...... $0. You are right that a single having of the block reward won't kill bitcoin (thus I still own a lot) but eventually that kind of system catches up. Do you know about the law of exponential growth? Well, this is the law of exponential decline. It is just as equally unsustainable.

Quote from: jonald_fyookball on December 07, 2014, 04:39:45 AM

Now, if you want to look at the long term and how much the fees would need to be to
support the miners when the block subsidies are gone, then
you need to look at the number of transactions, how big the network will be by
then, and how much security is needed. But you haven't done that -- you haven't
worked out those figures.

oh yes I have done the numbers, I just didn't post them. to keep the hash rate the same as today, but have no subsidies for miners then the network will need to process 320 times (32,000%) the amount of transactions per day than it currently is. That is assuming that the miners and hash rate stay stagnant.

Now here is where I admit my knowledge is a bit thin. I don't know if a Bitcoin network with 32,000% more transactions can be maintained well enough with today's hashrate. If it can be than that is okay. When it comes to this fact, I readily admit I don't know.

To be clear, I love Bitcoin and think it is amazing. I just think a better system where the blockchain is protected by a system that doesn't cost so much would be better if it was just as strong (PoW for my criticisms is definitely strong). When I look at the long game of Bitcoin far off, it just seems unsustainable to me. If I am wrong on my numbers, please help me out. I hate being corrected but I hate spouting wrong information even more.

You are not addressing jonald_fookball's point about competition. That is the incentive for mining. It also determines the security. Competition is a function that makes the security predictable. Without cost/benefit analysis of the competition you have nothing to base trust. You would have no mathematically predictable way to establish risk. Trust based on unknowns is called faith.