IIRC, Bitcoin transaction fees aren't a fixed percentage or amount, they are something included as part of the transaction that is essentially a bounty for the miner to verify the transaction, and miners can preferentially decide which transactions to verify first based on the offered fees.

Presumably, as creating new coins stops being a source of reward for mining, the cost you need to offer with a transaction to get it verified will (assuming bitcoin remains in active use) go up.

choult said that, as he/she understands it, mining will stop because there won't be any new bitcoins rewarded with new blocks. That's not an incomplete understanding, it's wrong.

Granted, it's wrong because of an incomplete understanding of bitcoin mining, which is that there are two parts to the reward. However, an incorrect conclusion based on incomplete information is still an incorrect conclusion.

Your statement, today, is probably correct. The percentage payout per block is probably worth a lot less than the value of the 25 bitcoins currently being rewarded. As others have stated, that'll probably change as the reward drops.

Besides only including transactions that pay a higher percentage in a block, I imagine that the higher hashrates will allow more transactions to be included in each block, so there are two ways miners can increase their return. Miners aren't just competing on speed to get the next block; they also have to get the largest block that includes the most transactions. When a transaction gets included in more than one block, the larger block 'wins'.

I suspect we're going to see a parallel to the transition from faster CPUs to multi-core CPUs that occurred when CPUs stopped getting faster. Until this year, we were seeing faster and faster software and hardware used to calculate hashes for bitcoin mining, but ASICs are almost certainly the end of that advancement. So now, I think, we're going to see miners expanding their capability horizontally by hashing in parallel... Maybe by splitting twice as many transactions as typically used today into two different blocks and trying to hash both at the same time.

> the percentage doesn't seem to bring enough money compared to the cost of electricity for those machines.

That is entirely dependent upon the value of one bitcoin.

The transaction fees for a block go to the miner.

If bitcoin is actively used in 2140 when the issue of new coins ceases, the value of even small fractions of a coin will likely be very high.

There are two ways to fund mining operations:

1) Tax the holders of coins

2) Tax the users of coins

Bitcoin starts with 1 (mining rewards) and then moves onto 2 (transaction fees) for long-term stability. I think this is dumb if your goal is widespread adoption because it taxes the activity that causes network effects to grow (transactions).

PPC sticks with 1 for the lifetime of the system (through a slow-growing monetary base), strengthening my belief that PPC is a strictly better design than bitcoin.

The free market will decide on that, and it will be fair. Even if we end up with ~3% fees, it would be totally worth it knowing that your account can't be randomly frozen, or your funds stolen by whoever is in charge of the fake wars (eg: war on drugs).