What will happen, specifically to the price of Bitcoin and transaction fees when the block reward drops to a negligible amount?
Today, each block reward is approximately worth 25 * $300 = $7,500. To generate a tantamount reward as today, with (an assumed) 4000 transactions per block at today’s exchange rate, the average transaction fee would have to be $1.87.
Under these assumptions that would put Bitcoin out of business in terms of being an affordable way to make everyday transactions, especially micropayments.
Now I know that block size is mutable so does this mean it’s inevitable? Or does it mean that the price of BTC will have to rise to at least the cost to mine a block divided by the transactions per block multiplied by the exchange rate to be worthwhile? Doesn’t this then mean that the value of Bitcoin outside it’s functional value, is then ultimately determined by the block size which markets don’t have control of?
Does BTC fiat price increase to meet the collective cost of actually hashing the transaction block or does the total block transaction fee value determine it?
My point is, when transaction fees are the ONLY incentive to mine (and that will happen eventually as a certainty) the total sum of the transaction fees must match the cost of mining the block they were included in. If the block costs more to mine than the value of the transaction fees in a block, miners (most) will shut down. At least so many will shut down that the network becomes insecure and Bitcoin will die.
