Why Does Bitcoin BTC Need Miners

Jul 28, 2017 - Another parallel with the precious metal is that there's a limited amount of Bitcoins that can ever be mined: no more than 21 mln coins. As of 2017, nearly 17 mln Bitcoins have already been mined. How Do Peercoin PPC Miners Work. Mining can be quite a competitive task as new Bitcoins are created at a predictable and fixed rate.

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If the capacity is constrained to be slightly less than the total transactions you can get the largest total fees. This is really easy to model. This is why I would expect miners to want a block-size schedule, either fixed dates where the block size increases by 10% or some algorithm similar to difficulty increase, that increases the block size to some proportion of the transaction traffic. There are at least three rational reasons for miners to want bigger blocks. First: 1,000 transactions at $5 fees = $5,000 10,000 transactions at $1 fees = $10,000 Smaller fees for users, bigger rewards for miners.

Second: Bitcoin's price has historically gone up proportionally with how much it is used. This means that the real world value of non-fee block rewards can continue to grow even as the nominal value halves every four years. Even when the block reward is less than a bitcoin ~15 years from now, that could still be greater than the $30k reward they currently get.

But only if bitcoin keeps growing. Third: Bitcoin has hundreds of competitors nipping at its heels. Most of the serious ones don't use sha256 hashing, so if one of those becomes Facebook to Bitcoin's MySpace then the miner's hugely expensive setups will quickly turn into worthless rusting scrap metal. Large scale miner here. Dogecoin DOGE Mining Hardware Requirements. A) the value of a crypto increases with its utility; keeping tx numbers artificially low is bad for its utility. B) more transactions with little fee can make more money than few transactions with high fees c) related to (a): substitution effect - people will move (and already have moved) to other cryptocurrencies (such as Ethereum). My personal opinion: not increasing the block size already long time ago was a huge mistake.

Some people create a climate of fear and uncertainty against hardforks and blocksize increase. Hopefully, this will be over soon. Looking forward for that! Miners' preferred block size is proportional to their brain size.

Some miners with small brains see $3 fees and think 'this is extra money for me!' These miners like small blocks because their small brains can only envision trying to 'take a bigger piece of the pie' by reducing the overall size of the pie. Other miners, with large brains, recognize that rapidly rising fees are not a good sign for Bitcoin.

These miners like large blocks, because their superior, larger brains enable them to recognize that while a small-brained small-blocker might get some extra%% in revenue from fees, that can't possibly compare with 10x or 100x revenue that could be earned instead through widespread adoption. So there you have it.

The block size you accept is a suitable proxy for your IQ.