The reward for solving a block is 25 bitcoins, but the fees, which are added to that, are usually less than 1 bitcoin. Fees are only a few percent of miners' income, and the miners have several factors to weigh up when they decide how many transactions to put in a block
- The risk of making orphan blocks. A larger block may take slightly longer to propagate across the network, and that slightly increases the chance that another miner will generate a valid block during that delay and propagate it faster. When that happens, the first miner misses out on the block reward and fees, about $5500 today
- A miner could put no transactions in a block, and still get the 25 bitcoin block reward, but if they do that, they are hurting confidence in the bitcoin network, and devaluing their investment into hardware and skills and the value of bitcoins they own. If you drag the chart left to see the history at https://tradeblock.com/blockchain then you may see some miners who put zero transactions in a block or very few transactions, but it is not so common
Orphan blocks are an important issue in the debate about block size increases which the article linked to is discussing. Increasing the block size is likely to increase the rate of orphaned blocks, though there are proposals that might mitigate that risk.
The ratio of fees to block reward is likely to change in future, influenced by many factors including block size, and there are many competing theories about what will happen as that ratio changes, which run the gamut from doom to success. The block reward is automatically cut in half every 4 years, and the long term plan for bitcoin seems to be based on the fees increasing in value to eventually replace the block reward
the long term plan for bitcoin seems to be based on the fees increasing in value to eventually replace the block reward
Arguing a little with my own post, with this quote from a Bitcoin developer: "There is no guarantee that future one-gigabyte blocks full of smaller transactions will generate enough fees to secure the blockchain...." https://blog.bitcoinfoundation.org/blocksize-economics/
> A miner could put no transactions in a block, and still get the 25 bitcoin block reward, but if they do that, they are hurting confidence in the bitcoin network
I don't think that's true at all. Even if some would not clear any transactions people would still be okay with that for as long as the rest does. And there are definitely some zero transaction blocks being minted.
The 0 transaction blocks tend to be ones that are mined in rapid succession(less than a minute after the previous block) and not actually miners intentionally including no transactions.
One reason is because you would gain cents of fees but only in exchange for adding many many kilobytes of unsolicited commercial adverting to the chain. This material must then be processed by all nodes and maintained for all time, and in doing so burning the tolerance of others to participate in the system.
It's like asking why you don't litter when doing so would save you the few moments it takes to put something in the trash. The health of the system is more important to many than extracting a few cents more in fees.
While the number of Bitcoin block chain transactions is increasing, their total value is not.[1] Volume in US dollars has declined slightly over the last year. We may be past "peak Bitcoin".
If blocks fill up, transactions with higher fees get through first. So the free market will solve this problem when necessary. It's in the interest of miners that fees go up, and the big miners control the block size, so a block size increase is unlikely.
Bitcoin's block reward halves next year, which instantly halves mining income. Bitcoin was designed so that when it became large enough, fees would support mining. Next year, fees become more important, and pressure for higher fees will increase. The system is functioning as designed.
This is a red herring to the issue of the current block size, which currently limits the network to only be able to perform 2.7 transactions a second.[1]
This means that if the country of Greece (11m) were to use Bitcoin, each person would only be able to make 1 transactions every 48 days.
That's also assuming no competition with the fees. The "Free Market" design that prioritizes blocks with larger fees would mean that some blocks stay in the queue for much longer than 48 days. Just for the country of Greece.
This block-size hurdle isn't new and is one of the ongoing examples of how Bitcoin is suffering from Tragedy of the Commons.
The offshore miners control Bitcoin, and they are independently and rationally aligned with their own self-interest and profit (as they should be). When it comes to forking changes that are not directly beneficial to the miners (block size), it's nearly impossible to get a consensus, even if it means making Bitcoin a better currency.
When you consider a change that makes it more difficult for a miner or cuts into a miner's profits, like increasing the supply to counteract deflation and hoarding, then you start to realize why Bitcoin is still having these issues.
You're inaccurately oversimplifying the mining market.
The most important thing that refutes any notion of "miners control the network" is that, if some miners adopt a ruleset unfavourable to users, users will simply stop accepting whatever that miner is mining as Bitcoins, and their profits will go to zero (because they're mining some Bitcoin-Like but not really Bitcoin currency). If users start using a different ruleset than miners, the miners have to switch over or they will have no one to sell their coins to.
Nope. It's neither inaccurate or oversimplified to say the miners have control, when the forked fix to the issue in the article requires a 51% consensus amongst the miners.
To say that the entire bitcoin userbase will band together to form a concensus to avoid miners is to turn the same blind eye to rational human behavior and tragedy of the commons. It's just as much wishful thinking and hand waving as thinking the miners will act solely out of benevolence for Bitcoin.
It's not a tragedy of the commons. Whether we grow the blocks or keep them the same, the network continues to function just fine. It's a matter of values and how to grow the network. If the miners do nothing, Lightning Network and off-chain networks will route most transactions outside of the blocks. Some in the network want Bitcoin only to be used for settlement, instead of for every payment. We've actually had larger blocks in the past (32 MiB I believe) and it was reduced to combat spam.
That's not a counter-argument to tragedy of the commons.
You just described off-chain transactions which aren't considered Bitcoin, and if anything are only a temporary fix to the block-size problem.
Tragedy of the commons exists because any of the solutions to a number of problems in the Bitcoin implementation need to be directly profitable for the miners in order to happen. For block-size and supply, they are the opposite of profitable for the miners.
Did you read my comment? The miners don't have to act selflessly; they just have to realize that no one will take their "Bitcoin" if it's mined with different rules than the actual Bitcoin that others are willing to accept as payment.
It actually doesn't necessarily require a 51% consensus to change the rules. That's just a nice tradition the devs follow. Users are free to change the rules and ignore miners that continue to use the old rules. Waiting for consensus just ensures that there will be a minimal loss of mining power.
Users transmit transactions to the network, where miners put them into blocks, generate hashes, and add them to the chain. Nodes always trust the longest chains as being correct. Miners control the blocks, not users.
This isn't some Starbucks or Target where a centralized policy maker is deciding what to do based on "user demand", assuming users were even able to collude.
I think you may have an oversimplified mental model of Bitcoin.
Consider this; if a miner were to change their code to mine 100 Bitcoin per block instead of 25, would people trust them just because they represent the longest chain? Obviously not.
A node will accept a block if it's in the longest chain AND it follows the node's ruleset.
Here is a good podcast episode with opinions representing both sides (Gavin Andresen and Peter Todd):
https://letstalkbitcoin.com/blog/post/lets-talk-bitcoin-217-...