What are the implications of this on the network stability wrt mining? Doesn't bitcoin need transaction volume to remain a stable network?
My read is that the incentive structure changes. Right now, miners are motivated by block rewards. In the future, they'll be motivated by transaction fees. If transactions are rare, mining profitably is going to become much more difficult. Pair this with 51% attacks, and the long ramp-up of mining capabilities starts to look like it will regress after the the rewards go to zero. Can the network survive that?
Also remember if you have wealth in bitcoin you would likely mine at a loss merely to secure your own bitcoin.
I can’t imagine mining going away.
I think every appliance in a household will end up mining a little bit and it will be intrinsic to the fabric of the economy. The way the internet is now.
This is not in line with my understanding if BTC. The difficulty adjusts automatically, so the real cost isn’t hashing, but energy. And there is no inherent reason why any less energy would be spent/wasted on mining/securing BTC (assuming it will be worth more than today).
I expect it will be cheap the way wifi is cheap on a raspberry pi. They just include it because you may use it and it’s cheaper to include it than to make both a version with and a version without the WiFi module. (If you inly use WIFI, then the sane argument goes for the redundant-to-you ethernet port.)
You are right about difficulty factor, but that just adjusts how fast blocks are won based on past 2 weeks.
Even when price of BRC has crashed, hash power doesn’t instantly go away.
Also an attack lets you re-organize recent blocks only. Increased depth gets more expensive pretty quick.
If mining chips are cheap and ubiquitous, then an attack us very hard, because you have to beat all the existing honest chips with your attack.
If mining is cheap to attack, the rewards of such an attack will be low.
If bitcoin is valuable, it will be expensive to attack.
I'm not convinced that you actually do have to make too many assumptions. The claim I'm making here is that bitcoin has had a steady and predictable increase in mining demand as the currency has grown, but that iff bitcoin becomes solely a low-volume high-value settlement platform (instead of a buy-coffee high-volume low-value blockchain), there will be a demand shock once the block rewards go to zero. You can reason about this while keeping the hashrates and cost of achieving that hashrate abstract.
If volume grows, this argument is moot because there will be plenty of transaction fees to gobble.
Transaction volumes over time have risen as well. If bitcoin has amy value to society in 113 years, people will pay to transact it. Whether that is one expensive transaction a month or a million every block I don’t know— but I think the latter is more likely.
You could also send null transactions which do nothing but pay a transaction fee
