Crypto-cancer fade out end of civilization for Fermi paradox?

[Jarek 31]

Imagine civilization gets a positive feedback mechanism for wasting resources, like cryptocurrencies: “one gets $100 banknote if burning $99 worth resources”, leading to exponential growth of waste at individual gains.

We can observe exponential growth of their energy consumption (below), worsening shortages of electronics, simultaneously these cult-like societies are growing in power/influence, can buy politicians (e.g. El Salvador) … further taking control of chip manufacturers and power plants, in a few years growing to 50%, 90%, 99% of world energy production?

Can such positive feedback be always balanced on a reasonable level, instead of approaching 100% of resources of civilization? In other words: could it lead to fading out end of civilization – as a way for “It is the nature of intelligent life to destroy itself” explanation of Fermi paradox? How frequent could it be? What are the chances for our civilization?

ps. Bitcoin energy consumption from https://cbeci.org/, nearly exactly 2x growth per year - in 6 years should grow from 1% to ~60% of world energy production:

 

[Rive]

Can such positive feedback be always balanced on a reasonable level

Could you please tell me the reason why cocaine production/distribution (far higher profit ratio than any crypto-whatever) failed to take over the world so far?

The 'cult-like societies are growing in power/influence, can buy politicians' part seems fitting that one too...

 

[Jarek 31]

Cocaine production is actively fought with by most of countries - now also starting to ban cryptocurrencies, but they still grow exponentially.

Are you saying that they will ban them fast enough to prevent approaching 100% of world energy production?

From perspective of Fermi paradox, how universal is such resistance - what percentage of civilizations could stop all such positive feedback mechanisms before being reaching self-destruction?

 

[Rive]

Are you saying that they will ban them fast enough to prevent approaching 100% of world energy production?

Exactly because of the extensive resource-requirements these 'currencies' has the potential to collapse lightning fast, the very moment the various bans send their 'value' below production cost.
In this regard they are even less 'safe' business than cocaine production.

So no worries. Once they gets inconvenient enough they will just vanish in a poof.

 

[Jarek 31]

They have banned crypto in the past, and now also try - but it still grows exponentially ...

There is strong positive feedback: the higher the price, the more people are focused, it becomes profitable to mine on a growing percentage of electronics, chip manufacturers have growing incentive to switch to miner production, the higher influence this society has ... e.g. on politicians like in El Salvador ...

Is there any really stable level below using 100% of world resources?
What level? What are the mechanisms preventing such civilizations from self-destruction?

 

[some bloke]

You have to consider the scarcity of the resources and the people who provide them. As cryptocurrency increases using energy, the amount of energy they create will increase to fill the market.

Until everyone is doing nothing but mining cryptocurrency, then you will not get to 100% of energy use devoted to it.

It's a very human thing to end up reaching mutual destruction through pursuit of fictional wealth, but I don't think it would ever reach 100%. You cannot eat money, crypto or otherwise. Someone has to grow and distribute the food. You could make a statement with a ship finding a planet where everyone is dead, but all the computers are still whirring away on solar power, hundreds of years later, racking up fake money in digital accounts for people long since dead.

I like the premise, but I doubt it's a route reality is taking!

 

[Jarek 31]

The problem is that there are strong positive feedback mechanisms - the higher the price. e.g.:
- the more people are focused on them - defending at any cost,
- it becomes profitable to mine on a growing percentage of electronics (like 7 year old GPUs https://www.pcgamer.com/the-gpu-shortage-means-msi-is-re-releasing-the-geforce-gt-730/ ),
- chip manufacturers have growing incentive to switch to miner production (electronics shortages),
- they "evolve" to consume succeeding types of resources (e.g. https://www.theguardian.com/technol...currency-chia-blamed-for-hard-drive-shortages ),
- the higher influence they have - also e.g. on politicians like in El Salvador: https://davidgerard.co.uk/blockchai...-mallers-speaks-users-test-the-system-so-far/

On what percentage of world energy consumption could cryptocurrencies really stabilize at? (balancing this positive feedback)

 

[Vanadium 50]

Things that cannot go on forever stop.

 

[Jarek 31]

Things that cannot go on forever stop.

Sure, cryptocurrency consumption can at most saturate to 100% of world energy production - any others equilibrium candidates in this [0,100]% range?

 

[fluidistic]

Note that many cryptocurrencies need much less computer power than Bitcoin, and will never consume that much energy, although they might widespread in the future.
As far as I understand, Bitcoin couldn't be used for mass adoption due to slowness of transactions (El Salvador is en masse? I guess not really.). Other cryptocurrencies could be better suited for that (at the detriment of other things), but so far people agreed that a Bitcoin is worth a lot whilst most other cryptos, much less.

 

[jack action]

one gets $100 banknote if burning $99 worth resources

How could that even be a sustainable business model?

 

[russ_watters]

Sure, cryptocurrency consumption can at most saturate to 100% of world energy production - any others equilibrium candidates in this [0,100]% range?

0 is the most likely value, but any other value between 0 and 100% is more likely than 100%.

Imagine civilization gets a positive feedback mechanism for wasting resources, like cryptocurrencies: “one gets $100 banknote if burning $99 worth resources”, leading to exponential growth of waste at individual gains.

There's always a negative feedback, you just haven't found it yet. Since this is the sci-fi/fantasy section, you can handwave away or ignore completed realities for the purpose of a story, but if you are interested in real life it doesn't work that way and this isn't the forum for such speculation.

[edit] Actually, you identified a critical limiter in your OP, and then ignored it.

 

[Jarek 31]

Indeed, if I properly remember, Bitcoin consumes now about half of energy of the world banking system (~150 vs ~300 TWh/y), but has ~3000x lower number of transactions than credit cards, so is ~1000x less energy efficient.
Already uses ~1% of world energy consumption, hence scaling it to credit card transaction level would exceed world energy production ~30 times.

Sure, other currencies might be slightly better, but generally there are already thousands of them and we are quite early civilization ... the big question is how the situation will evolve next 10, 100, 1000 year?
Could this kind of social positive feedback mechanism lead to "It is the nature of intelligent life to destroy itself" type explanation for Fermi paradox ( https://en.wikipedia.org/wiki/Fermi_paradox#It_is_the_nature_of_intelligent_life_to_destroy_itself )?
What could be its probability?

For physicists: what percentage of world energy consumption could be the equilibrium - with this positive feedback stably balanced with other mechanism? Which ones?

How could that even be a sustainable business model?

It is finite pyramid of money, there is army of people at the bottom putting own money, there cannot be pulled more (minus cosmic costs), the pulling is mainly made by those at the top, e.g. through manipulation with tweets, recently directly $3.6B by some brothers in RPA etc.
Mining is the core activity of this money transfer scheme from bottom to top.

Some better explanation:

 

[russ_watters]

It is finite pyramid of money, there is army of people at the bottom putting own money, there cannot be pulled more (minus cosmic costs), the pulling is mainly made by those at the top, e.g. through manipulation with tweets, recently directly $3.6B by some brothers in RPA etc.
Mining is the core activity of this money transfer scheme from bottom to top.

If crypotcurrency is a ponzi scheme that would be a crime, but in either case, all Ponzi scheme's fail. That's a basic feature.

 

[Jarek 31]

The most known official is https://en.wikipedia.org/wiki/OneCoin

All Ponzi schemes in the past have failed thanks to some social fail-safes, but what if it would grow in power above such fails-safes e.g. buying crucial resources and people?

 

[russ_watters]

All Ponzi schemes in the past have failed thanks to some social fail-safes, but what if it would grow in power above such fails-safes e.g. buying crucial resources and people?

No, Ponzi schemes fail because they run out of input money/suckers. Sometimes that's because law enforcement shuts off the flow of money in, but often they just implode on their own. Either way, since capital and suckers are not an infinite resource, all Ponzi schemes will eventually fail for that reason.

You could look at it this way as well: A Ponzi scheme fails at the moment it sends out the first money (either taken as profit by the owner or by an early "investor"). It's just that nobody knows it yet.

 

[BWV]

Civilization did not end in the 1700s after all available resources were repurposed to grow tulip bulbs

 

[jack action]

All Ponzi schemes in the past have failed thanks to some social fail-safes

No, that's not true. Ponzi schemes failed by design.

Let's imagine you can work 1 hour and get some amount of resources to use. Now, someone comes along the way and makes you believe that if you work ½ hr for him you will get twice as much for your work input. But he's lying to you and you receive in fact the same amount of resources, pocketing the extra ½ hr you put in. He conned you, but he was good and you saw nothing. It is possible you spend the rest of your life doing it without noticing anything wrong.

Now imagine that someone tries to con you by making you work 100 hrs and you still get the equivalent of 1 hour's worth of resources. That is your scenario of "get 100$ after spending 99$ worth of resources". Do you really think people can withstand such abuse? They will stop well before that because it is no even physically possible to work that much. This is how all of these schemes end at some point or another. The ones who quit are the ones who lose.

 

[Jarek 31]

There is now a trillion dollars in cryptocurrencies, what further grows exponentially - they can buy a lot for that, including power plants, chip manufacturers, politicians, regulators ... and more and more regular people, we can already see ads everywhere.

I can imagine it exceeding fail-safes, saturating toward 100% of world energy consumption - among others e.g. by buying power plants and people who could prevent it.

 

[russ_watters]

There is now a trillion dollars in cryptocurrencies, what further grows exponentially...

It's highly chaotic and young. Saying it grows exponentially is highly speculative/unlikely to be true in the long term.

...they can buy a lot for that, including power plants, chip manufacturers, politicians, regulators

Market cap is spendable, but that then decreases the market cap. It is "paper" value until you sell the asset.

I can imagine it exceeding fail-safes, saturating toward 100% of world energy consumption - among others e.g. by buying power plants and people who could prevent it.

Again, if this is for a sci-fi story, you are entitled to imagine whatever you want. But if you are trying to speculate about a real-life scenario, you aren't entitled to ignore realities of things like market forces.

 

[russ_watters]

@Jarek 31 Here's maybe a more direct question: Have *you* cashed-in all of your assets and taken out all the loans you can get to buy cryptocurrency mining hardware? If not, why not?

 

[BWV]

Now if you want an historical example of how badly a pyramid / ponzi scheme can wreck a country, look at John Law and the Mississippi scheme, which began as an attempt to work off Louis XIV's vast debts (~400% GDP) by his successor through selling interests in the vast gold and silver deposits in the French colony of Louisiana. Louis XV gave Law effective control over the French Treasury and trading rights with French colonies. Law then converted gov debt into shares of stock in the Mississippi Company which owned all the trading rights to the colonies and its shares became a massive bubble. The French crown was able to eliminate all its debt through converting to shares in the Mississippi company, leaving the purchasers of shares as bag holders. The losses of French citizens and subsequent inflation / currency devaluation contributed to the subsequent revolution.

 

[Jarek 31]

It's highly chaotic and young.

Reached a trillion dollars in a few years of exponential growth - so how could it look in 10, 20, 100 years?
In what percentage of world energy consumption could it finally stabilize at?

Market cap is spendable, but that then decreases the market cap. It is "paper" value until you sell the asset.

No longer true, e.g. the third cryptocurrency: Tether is said to just print money "out of thin air" (e.g. https://www.ccn.com/tether-print-5-billion-crypto-error/ ) and pump them into other cryptocurrencies:
And this is still just the first years of "financial engineering" - they will find more and more ways to squeeze money from these schemes, create further ones, much faster than regulators can react.

Again, if this is for a sci-fi story

Indeed, we are in SF subforum, the question concerns Fermi paradox, using the only example of civilization we know - trying to understand long-term consequences of positive feedback mechanisms we observe.

Have *you* cashed-in all of your assets and taken out all the loans you can get to buy cryptocurrency mining hardware? If not, why not?

I have good situation in academia, work by doing what I like, what fully covers my financial needs.
But there is a growing population of people financially desperate in various ways, e.g. due to contrast between rich and poor growing to infinity - the desperate are the main targets of money pyramids.
https://inthesetimes.com/article/amc-gamestop-bitcoin-cryptocurrency-bubble "Every New Financial Bubble Is a Cry of Desperation"

ponzi scheme can wreck a country

Indeed, the Fermi paradox question concerns if it could wreck a civilization by growing stronger than fail-safes, e.g. 1 promile of population reaching not only 99.9% of resources, but also consumption - made possible by "mining"?
What could be probability of that per e.g. 10, 100, 1000, 10000 years?

Classical billionaires could reach the highest direct consumption probably by e.g. flying private jets.
Modern crypto-billionairs can build succeeding mining operations just to direct more money to himself - no longer have upper bound for direct consumption.

 

[Office_Shredder]

This whole thing is assuming that if someone used all the world's energy to print 10x to as many bitcoins as exist already, they would now be worth 10 trillion dollars. I think the price of Bitcoin would just collapse when they tried to actually use it as money (or even earlier since this event if public).

There are also only a finite number of bitcoins that can be created, so you can't actually do this. Right now you can only get to about 15% of all bitcoins, then there are literally no more left to mine. Other currencies might effectively avoid this problem, I'm not sure.

 

[Rive]

There are also only a finite number of bitcoins that can be created, so you can't actually do this.

If all bitcoins got mined then a new cryptocurrency will be created (oooops: some were created even before 'depletion' of bitcoin mines).
So this is:
- not an issue ( )
- it also kind of proves that the main driving force is not actual use: it's mining for the sake of mining (profit).

 

[Office_Shredder]

If all bitcoins got mined then a new cryptocurrency will be created (oooops: some were created even before 'depletion' of bitcoin mines).
So this is:
- not an issue ( )
- it also kind of proves that the main driving force is not actual use: it's mining for the sake of mining (profit).

Why would anyone buy these new currencies? The arguments for a crypto currency existing are compelling, but what is the point of the tenth one? You can see this play out in practice, the top ten cryptocurrencies hold almost all the value.

 

[Rive]

Why would anyone buy these new currencies?

Why did people started buying bitcoin, to start with?

 

[Jarek 31]

Indeed, while bitcoin problem might be eventually resolved, there are already thousands of cryptocurrencies - in just a few years.
These schemes of money transfer quickly "evolve" e.g. consuming further types of resources ( https://www.theguardian.com/technol...currency-chia-blamed-for-hard-drive-shortages ) ... much faster than regulations and their fail-safes.

How could it evolve in 10, 100 years? On what percentage of world energy production could they stabilize at?

 

[jack action]

Tether is said to just print money "out of thin air"

The only possible outcome of this is the devaluation of a currency. Once the currency is devaluated, it is the end of the scheme.

trying to understand long-term consequences of positive feedback mechanisms we observe.

There are no long-term consequences with those schemes, especially on a big scale. It is always short-term, no more than decades on a small scale.

For example, Bernie Madoff ran his Ponzi scheme, worth $64.8 billion, for at most 48 years (most of it probably done in the last 15 years). But only $36 billion was real money from investors, of which $18 billion was returned to them, so "only" $18 billion was really stolen. The rest was just "money out of thin air" that was promised to investors but never existed.

Trying to do that on a planetary level - using 99% of worldwide resources - wouldn't last decades before the system failed on its own.

I found a simplified website to explain the world's net worth. If you want to buy everything on the planet, you need $290 trillion. But there are also derivatives (basically consisting of casino-style bets) that are estimated to over $1 quadrillion. Your cryptocurrency operations probably fall into that category. As you can see, you don't need cryptocurrencies to be worried about the fragility of the economic system.

 

[Jarek 31]

The exponential growth also concerns real resources, including billionaires exploiting opportunities (e.g. with help of Twitter), below is plot suggesting that gold investors recently switched to crypto ( from reddit.com/r/Buttcoin/comments/lgd58q/btc_is_stealing_revenue_from_gold_miners/ ).
And these are still early days - they can e.g. invest these fortunes into further more sophisticated scams, buy politicians/regulators etc. - being more flexible and having much more resources than regulators.

We are used to the richest 1 promile controlling larger and larger percentage of world resources.
But in the past they just couldn't directly consume these resources ... crypto has removed such upper limits, one can waste practically all available resources on mining.

 

[russ_watters]

- it also kind of proves that the main driving force is not actual use: it's mining for the sake of mining (profit).

You're not actually saying it, but I think you probably agree that that's a problem for cryptocurrency. The contradiction between "investment" and "currency" has been discussed here before, but whatever the ultimate utility is as a currency, most of its value is driven by investment Ponzi scheming. So one way or another, it's got to collapse/the problem the OP describes does not exist.

 

[Vanadium 50]

I wouldn't call cryptocurrencies a Ponzi scheme. That's reserved for a particular kind of financial monkey business. Bitcoin and its friends represent a different kind of financial monkey business.

Fundamentally, the transaction is BTC for USD (or your favorite currency). "Mining" is simply a way to get a discount by paying for the electricity, computing etc. yourself instead of paying somebody for having done this work in the past. That simplifies things.

So, why would anyone want BTC over USDs? Two reasons:

1. You can buy illegal things with it
2. It's increasing in price, so one can sell it later for more.

#2 is more of a pump and dump than a Ponzi scheme, but I would call it a plain old bubble, just like we've had over the past 400 or so years. As in all such bubbles, the people who got early do well at the expense of those who came in later. Who might those people be in this case? I'd look at Reason #1.

 

[Rive]

whatever the ultimate utility is as a currency, most of its value is driven by investment Ponzi scheming.

Well, about that I'm not sure. Traditionally, currencies emerged from the need of smooth value comparison between various goods. Unless the basis is badly shaken this function persists, thus giving some kind of sense of 'value' for the currency, apart from its cross-quotes to other currencies.
For bitcoin, this step never existed to start with. It's artificial 'value' is a very different can of worms, by my opinion.

 

[jack action]

I wouldn't call cryptocurrencies a Ponzi scheme.

They're not Ponzi schemes, but they are currencies for which some malicious people can play some tricks to alter their values - like any other currency.

The cryptocurrencies, used as intended, seem legit to me. There is a group of people that makes sure the transactions are done properly and they are paid for doing the job. Not more different than paying people to print money and making sure only those bills are in circulation.

 

[256bits]

Why is it called crypto "currency" anyways?
Why not cryptonumber, since that is all it is in the digital world.

The price of a bitcoin is only related to the demand ( and the limited supply ), much like art, of which there seems, or had been, a push to some sort of digital art that people could invest in.

Why did people started buying bitcoin, to start with?

For the fun it it at the beginning, as it was something new that didn't at all cost that much, and you could start mining with minimal investment, even on your home computer. Now there are farms cranking out numbers as they are staying in it for the long haul, and using energy resources for little gain to society.

As the OP says, widespread use, if it ever becomes that, can end up draining the economy. It doesn't have to reach the consumption of 100% of resources, maybe even just 10% would be enough to slow growth to a standstill.
Scenario - Consider, if a government wants to print money right now the actual 'paper printing' cost is somewhat minimal ( baring no rampant inflation crisis ) in addition the what other agencies do charge to get the money out there. If a bank wants to lend you some money, a surcharge is put on the loan as interest. If they have to add in the cost of mining the cryptocurrency, then the price of the load will reflect that incurred cost, being passed on to the consumer of the loan. A 5% load in normal times would have an 'inflated' interest rate, perhaps up to 25%, 50% depending. Investment drops in the economy due to the high price of money, no one can work hard enough to service a loan, stagnation and eventual and collapse of civilization for the middle class, possibly all of civilization.
I would consider the OP premise is based on something more than shear fantasy.

 

[jack action]

If they have to add in the cost of mining the cryptocurrency, then the price of the load will reflect that incurred cost, being passed on to the consumer of the loan. A 5% load in normal times would have an 'inflated' interest rate, perhaps up to 25%, 50% depending. Investment drops in the economy due to the high price of money,

"... fewer transactions are required, less money to be made in cryptocurrency, people move to a more efficient way of making transactions."

It seems more probable than people working themselves until they - or the whole system - collapse.

 

[BWV]

This whole thing is assuming that if someone used all the world's energy to print 10x to as many bitcoins as exist already, they would now be worth 10 trillion dollars. I think the price of Bitcoin would just collapse when they tried to actually use it as money (or even earlier since this event if public).

There are also only a finite number of bitcoins that can be created, so you can't actually do this. Right now you can only get to about 15% of all bitcoins, then there are literally no more left to mine. Other currencies might effectively avoid this problem, I'm not sure.

The proof of work scales with the value of BTC, not the quantity. If hypothetically all the BTC is mined, miners will still need to be compensated for supplying computer power to the network, otherwise miners will just quit and the whole thing will crash

 

[Office_Shredder]

The proof of work scales with the value of BTC, not the quantity. If hypothetically all the BTC is mined, miners will still need to be compensated for supplying computer power to the network, otherwise miners will just quit and the whole thing will crash

But that demand is strictly bounded by what people actually want to spend the do Bitcoin transactions

 

[BWV]

But that demand is strictly bounded by what people actually want to spend the do Bitcoin transactions

Absolutely, which is why I think the whole enterprise is a pyramid scheme that will eventually collapse

 

[Vanadium 50]

a pyramid scheme that will eventually collapse

I would say an asset bubble. Where is the pyramid?

It also doesn't have to collapse. It could gradually approach an asymptote. And where might this asymptote be? The US money supply (M2) is about $21T. Even if BTC doesn't appreciate, it's still useful for buying illegal products and services. I will use the Steven Brust "Jhereg" approximation and estimate crime as 1/17 of the economy. So $1.25T would be the necessary total value of BTC. Divide that by the 21 million bitcoins, and the asymptotic value should be around $60,000.

That's not too far off from its peak value.

 

[phinds]

The proof of work scales with the value of BTC, not the quantity. If hypothetically all the BTC is mined, miners will still need to be compensated for supplying computer power to the network, otherwise miners will just quit and the whole thing will crash

Huh? If all the bitcoins are mined, there ARE no "miners" any more. The people who were miners are now just people who are stuck with some expensive computer kit for which they may or may not have made an acceptable ROI but other than them, who cares? What does that have to do with the ongoing value of BTC and what is it that you think crashes?

 

[russ_watters]

I wouldn't call cryptocurrencies a Ponzi scheme. That's reserved for a particular kind of financial monkey business. Bitcoin and its friends represent a different kind of financial monkey business.

I would say an asset bubble. Where is the pyramid?

Yeah, the OP introduced the Ponzi scheme idea, but I agree it is more of an asset bubble. The differences, though, aren't necessarily that big. To me the key difference is transparency/fraud. In a Ponzi scheme the investors believe(are told) there is real value and growth, when in reality it is just plain a lie. In an asset bubble the value is transparent: it's basically zero (or just a random, small fraction), but at least it isn't a lie! The commonality is that in both cases the health of the scheme relies on investor confidence and a constant influx of money.

It also doesn't have to collapse. It could gradually approach an asymptote.

Bubbles have to pop. Bitcoin may have utility as a currency and that may have value, so it doesn't necessarily need to go to zero, but I don't see how that could be an asymptote. The current valuation doesn't necessarily have anything to do with the ultimate value.

I will use the Steven Brust "Jhereg" approximation and estimate crime as 1/17 of the economy. So $1.25T would be the necessary total value of BTC. Divide that by the 21 million bitcoins, and the asymptotic value should be around $60,000.

That's not too far off from its peak value.

I don't see why that should have anything to do with anything. First off, I think you used the US GDP ($21T) instead of the world GDP($65T) there, but more directly, so what? Why does annual GDP have anything to do with the value of money in circulation? Surely it's the holding not the circulation rate that matters there?

...though this may get deeper into money policy/theory than I'm familiar with. I don't know what the sum of USD held electronically in banks is...or, again, why that has anything to do with anything.

 

[russ_watters]

A few things to point out here:
1. Bitcoin is an absolutely terrible currency, based on efficiency (energy per transaction). Other cryptocurrencies could do better though.
2. As pointed out previously, cryptocurrency values are currently based on bubble/pyramid perceptions, not utility. The value/utility is different if 99% are circulated weekly vs if 99% are held long term and 1% circulate weekly.
3. Because cryptocurrencies are all viewed as equal(ly pointless), their values tend to track each other in the short term, though separate based on popularity in the long term. But ultimately if one gets adopted/endorsed by major banks/countries, the value of the others should rapidly go to zero. The fad value -- the "potential" is ethereal, and once the "potential" becomes real for one, it ceases to exist for the rest.
4. In order to be adopted, a cryptocurrency needs to be stable, which contradicts the appreciating bubble/fad valuation. That conflict/contradiction is why I don't see potential for an asymptote.

 

[BWV]

Huh? If all the bitcoins are mined, there ARE no "miner" any more. The people who were miners are now just people who are stuck with some expensive computer kit for which they may or may not have made an acceptable ROI but other than them, who cares? What does that have to do with the ongoing value of BTC and what is it that you think crashes?

Bitcoin miners are getting paid an annual run rate of around $9B or around 1.4% of BTC market cap(https://ycharts.com/indicators/bitcoin_miners_revenue_per_day).

so how do the people who provide the computing power to the blockchain continue to get paid once all the bitcoins are mined? The miners provide the entire computing power to process transactions and maintain the blockchain. The only reason it functions now is the 1-2% annual dilution from new bitcoin earned by the miners. For the network to function, the people providing the computing power will need to continue to be paid a comparable amount

 

[russ_watters]

The miners provide the entire computing power to process transactions and maintain the blockchain. The only reason it functions now is the 1-2% annual dilution from new bitcoin earned by the miners. For the network to function, the people providing the computing power will need to continue to be paid a comparable amount

This has confused me as well. If the miners are maintaining the currency/transaction record, does that mean when the mining stops the currently can't function anymore? Maybe other cryptocurrencies don't have this problem, but it feels like Bitcoin is a time bomb.

 

[Rive]

so how do the people who provide the computing power to the blockchain continue to get paid once all the bitcoins are mined?

The transaction fee is supposed to cover that. But mining is continuously slowing, so 'the end of mining' is still supposed to be a century (or so) away.

 

[BWV]

This has confused me as well. If the miners are maintaining the currency/transaction record, does that mean when the mining stops the currently can't function anymore? Maybe other cryptocurrencies don't have this problem, but it feels like Bitcoin is a time bomb.

yes, one bitcoin transaction consumes upwards of 1,000 kwh - transaction processing and updating the blockchain is the work miners do - its not a separate activity

https://www.statista.com/statistics/881541/bitcoin-energy-consumption-transaction-comparison-visa/

 

[BWV]

The transaction fee is supposed to cover that. But mining is continuously slowing, so 'the end of mining' is still supposed to be a century (or so) away.

Yes, my point is the transaction fees would have to annualize to 1-2% of BTC market cap maintain the infrastructure of the network

 

[Vanadium 50]

If all the bitcoins are mined, there ARE no "miner" any more.

I believe that this will never happen, by design. Mining gets more and more expensive over time, but even though the maximum number of BTC is fixed, there never is a time when there is nothing left to mine. We have already reached the point where it is too expensive to mine "in your parents' basement".

 

[BWV]

I bet the creators of the scheme just needed to set the date the final bitcoin is mined far enough away (2140) so the discussion would forever remain academic