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Many proponents state that Bitcoin will not work in the long term when block rewards drop below 1 BTC or even zero and have mining rely on just transaction fees. I never did the math calculations until now, but I can see what they mean when they say you can't rely on the fee market.

Reasoning is the following, when mining rewards reach ZERO:

  • Bitcoin current max transactions per second is: 7 tps
  • 7 * 600 seconds (10 min) = 4200 transactions per block
  • If each transaction was worth:

.05 USD = .05 * 4200 transactions per block = $210 block reward

.50 USD = .5 * 4200 transactions per block = $2100 block reward

This is assuming block rewards are ZERO.

Now if leaving a mining machine on and it cost a significant amount of electricity. Many miners won't turn it on anymore, which leads to a much lower difficulty hash rate. From there any big player can come in with massive mining power and cause a 51% attack or even just stall the network by not accepting any transactions.

What are some of the proposed solutions to this supposedly problem in the long term?

marked as duplicate by Max Vernon, chytrik, Anonymous, Raghav Sood, Pieter Wuille Oct 17 '18 at 2:38

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