Will mining in the (far) future produce a payout?

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According to this question, there will only be 21 million bitcoins at most. These coins are being produced logarithmically by mining, so the payout will decrease as time goes by.

When all 21 million bitcoins are in circulation, will there be any reason for mining? Is mining only useful for us "early adopters" or will it be a permanent part of Bitcoin?

styfle

Posted 2013-04-13T09:26:29.193

Reputation: 123

Question was closed 2013-04-19T16:32:37.873

1@Lohoris Not quite the same question but very helpful. Thanks. – styfle – 2013-04-14T07:29:44.453

Answers

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Miners earning = block reward + fees

Miners will continue to get block reward in the next hundred years, but long before the reward "stops", the miners will get most of their earnings from transaction fees, so they will continue to have economic incentive to mine, when the block reward stops.

Nicolai

Posted 2013-04-13T09:26:29.193

Reputation: 1 778

Aren't the transaction fees much lower than the current payout of 25 bitcoins? I read that mining is not profitably unless you have powerful GPU's so when the reward is gone, I can't imagine the transaction fees alone will be a good incentive. – styfle – 2013-04-14T07:27:50.617

@styfle they are now, but once the reward stops being high enough, market should adjust itself: miners would stop accepting low-fee transactions. – o0'. – 2013-04-14T09:17:18.543

@Lohoris I read something about higher transaction fees means the block has higher priority. This might require a new question, but how are transaction fees determined? – styfle – 2013-04-16T05:24:43.137

@styfle wiki, plus many questions here

– o0'. – 2013-04-16T08:13:03.100

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The way I understand it, the transaction fee that is automatically recommended by Bitcoin clients is distributed to miners.
That means, that even when there are now Bitcoins left to mine, miners still will earn coins because of the transaction fees. As far as I understand it, miners also serve the purpose to validate transactions and to ensure the integrity of the blockchain, and receive the transaction fees for this.

https://en.bitcoin.it/wiki/FAQ#How_much_will_the_transaction_fee_be.3F

jeverling

Posted 2013-04-13T09:26:29.193

Reputation: 131