One of the core strengths of Bitcoin is in dynamic difficulty adjustment. If there are fewer people mining then the difficulty to mine new blocks will automatically decrease, which will in turn increase the value/revenue per block. And vice versa in the case where there are more people mining. So regardless of the state of the market, you will always reach an equilibrium point where it will be profitable.
The one asterisk that needs to be added here of course is that with sufficiently low difficulty, a double spend attack becomes more viable, but this is a somewhat overblown threat. It's low reward, extremely high cost, and 'easily' undone if the market so agrees. It shouldn't be ignored, because it is indeed a threat, but at the same it's also kind of a 'meh' threat.
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edit: And for those who are may not be aware. Even once the final Bitcoin is mined, miners will continue mining - something which may be counter-intuitive. Whoever mines the block will get no coins, but will get all revenue from the fees attached to whichever transactions are processed.
>you will always reach an equilibrium point where it will be profitable.
That is my point- that equilibrium point will eventually be low enough that 51% attacks, selfish mining attacks, etc. become feasible and highly desirable to execute.
>It's low reward, extremely high cost
It is currently low reward/high cost. But it will eventually not be.
>and 'easily' undone if the market so agrees.
False. Bitcoin has not made a hard fork in how many years? Can you make a hard fork faster than the attacker can "cash out" to crypto-crypto exchanges? Highly doubtful.
>Whoever mines the block will get no coins, but will get all revenue from the fees attached to whichever transactions are processed.
... which is dependent only on the fee market, and currently amounts to a small fraction of total block reward.
because i expect miners to not operate at a loss. they can address this by either turning off their miners (which is most likely to occur when coinbase dominates the block payment amount), or by charging more to process transactions.
>so far, by-and-large, the proportion of block profit coming from transaction fees has increased, as expected:
of course it has. I am not talking about the proportion of block profit, I am asking how you expect the total block profit to stay the same from just fees. The network will have to survive when the proportion will eventually be 100%
miners will choose to exclude transactions from their blocks if the transaction fee included isn’t high enough.
the transaction fee isn’t some algorithmically determined value, it’s completely controlled by market forces (for better & worse).
there are plausible arguments for transaction fees greatly exceeding even the original coinbase amount, although ultimately what matters is the value of those fees in local currency, contrasted with the cost to mine the block containing them.
I expect on-chain transactions will eventually be extremely high-value, between major players and institutions willing to pay the fees, while the daily transactions will be on sidechains/other layers.
I'm not sure the fees will actually change a whole lot if denominated in BTC. I just expect that when 1 BTC is worth a lot more than it is now in fiat, people won't be paying for their coffee on-chain (assuming inflation doesn't do crazy things to the price of a cup of coffee!).
So just like the current financial system where the real transactions are between the fed and the banks while everyone else you me and him are just fiddling with numbers in a mainframe table.
