I *think* the question being asked is if when coin generation for found blocks goes away and pools/miners will only accept transactions with fees how high will the fees go -- if they will be 5-7% or higher such as other methods of payment.

The answer to this, from what I've read, is that the network will set their own limits at that point. Some miners will still take free transactions, while some will set to only take transactions with X, Y or Z fee, and just depending on how much your fee is depends on how many miners will include that transaction in their block, thus lowering the possible time your transaction would be unconfirmed. This is as I understand it, which might be incorrect.

Yes this is my question .. sorry for not clearing it up from the beginning ... .

And yes it will be a free market with high competition to lower the fees.

Yet again the market will be having a hungry huge mining power which do not benefit from 50 BTC from a new block any more thus wanting higher fees or goes offline ... as simple as that.

I dunno what to say to clear the question more ... but when mining ends (or no longer profitable) it will be a trade off (higher mining fees to keep secure huge hash network and no more small transaction fees for BTC system OR low transaction fees and a lot of mining data centers dropping out and less secure network).

I know the free market equilibrium is what will fold and survive. But logically these hungry mining monsters would require huge daily transactions with significant high transactions fees to keep existing and securing the network.

maybe there will be a market wash out and we back to CPU mining at some time ... but again that will make the currency insecure enough to hold large values of other monies and transactions as a couple Giga hash rigs can compromise it with invalid block generation (by design).


I hope my question is more clear this time .. and I really hope someone clarify this issue for me .. as I see this day very close with the crazy daily new Giga FLOPS jumping in the mining area daily.


 

The problem is that we no longer have a competition of miners, but a competition of pools, lone miners will have no noticeable effect on transaction selection for the foreseeable future. The limited number of transactions pickers in the current mining eco-system, combined with the current  complete lack of scalability of transaction verification means that we will see a strong incentive towards fee laden transactions as the market matures. This creates the very real possibility of the mining pools arbitrarily setting rules that bypass the protocol to impose higher fees on the market.

At current we have a 1MB block size limit which is a kludge to prevent transaction spam, even if that limit is not lifted, and the average fee was 0.005BTC per transaction for full blocks a miner would still make 25BTC per block, which is enough to allow miner market equilibrium. This has the twin technical problems that there may not be enough transactions, or they can't be verified fast enough to fill the block. The first problem will fix itself if the market takes off, the second is far from intractable.

That's not how it works.  You decide which transactions to include before you "complete a block".  Completing a block means finding a nonce that makes the block hash to a low enough value, where the block includes the list of transactions you're including.

It's never "non-profitable to mine" due to excessive computation, not as long as people are still using bitcoin at least not for everyone.  The difficulty of mining will adjust so that the same amount of mining (in terms of blocks created) is happening no matter how hard people are working at it.

(Now, in the far future the income from mining might not be enough to provide adequate security, which is a concern, but thats not at all the same as there being no mining.