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> It's a free market. It's a broken market, one in which the supply of space in the blockchain is unresponsive to increases in price induced by higher demand.

by pash 11y ago

> It's a free market. It's a broken market, one in which the supply of space in the blockchain is unresponsive to increases in price induced by higher demand. This impasse over block sizes and Bitcoin's governance would never have happened if Satoshi Nakamoto had designed the protocol well in this respect. It's unfortunate that nobody seems interested in fixing the basic problem, which is arbitrary parameters trying to do the job of endogenously determined economic variables.

zdkl 11y ago
Why is it automatically assumed that higher tx fees are bad? It only disincentivises microtransactions on the bitcoin blockchain. There's nothing stopping anyone from using another coin (litecoin springs to mind) for smaller transactions. TL;DR microtransactions discouraged on BTC blockchain? What's the problem?
- matt4077 11y ago
  1. People want to use bitcoin for transactions. 2. They're priced out of the market. 3. OMG this us so obvious why am I even...
  - zdkl 11y ago
    Yeah but it's not as if there weren't literally hundreds of altcoins with enough liquidity to handle the lower end of the tx value scale
    - ori_b 11y ago
      At which point, why is there a need for bitcoin at all?
      - zdkl 11y ago
        Well... There isn't, in the same sense as there's no need for specifically the USD in the grand scheme of things, right?
        ori_b 11y ago
        Right. But the reason I use USD is because it's what I spend in. If I'm primarily in an area that doesn't use USD, I would avoid holding USD. There's no benefit for the overhead. This is an argument against using bitcoin.
        zdkl 11y ago
        I agree with you, its not for everything but there inherent benefits to the bitcoin protocol/platform. Whether these integrate with your use case is (no offense intended) irrelevant to its properties
- rtpg 11y ago
  Microtransactions being discouraged on BTC is basically the same as " only big players can afford to interact on BTC " This is basically the same as the nightmare scenario anti-2MB people describe with more centralization. By refusing to fix the protocol you are going to end up with a scenario where small players cannot participate in the block chain.
  - zdkl 11y ago
    Well from a casual following of the coin world I'd say the ship has sailed a while ago on centralization. Individual miners represent what, low 2digits percent hashing power? It seems everyone wants to believe so hard bitcoin is the currency you'll buy bubblegum at 25c with, maybe it's more the coin you use for 100s$ type transactions rather? What would be wrong with embracing using other chains? I fail to see anything short of a dynamic altcoin ecosystem to keep the required pseudonymous/microtx/decentralised characteristics alive. I mean bitcoin is great and all but it can't be everything to everyone and that's okay. Let the 'real world' interface on BTC, and we'll interface BTC to what we actually use. As always.
    - ehnto 11y ago
      You conflate people mining with people who could benefit from bitcoin as a uewful currency. The issue your parent comment describes isn't an issue of just usability though, but of market control. If you push out people who can't afford large transactions then you eventually have currency owned and controlled by the few who can afford it. Hardly the original vision of bitcoin. But for everyone else, if I can't buy lunch with it due to high transaction cost then I have no interest in storing any wealth in it either, money is useless if it isn't usable. So if it isn't a currency for buying lunch, and it isn't a currency for storing wealth, what the hell do I use bitcoin for? Pretending to play daytrader at the foreign exchange?
      - zdkl 11y ago
        You'd be a fool to store value in it long-term regardless of target tx value. I'd argue it's main purpose is as "middle currency". It has the potential of acting as synchronization mechanism for any two parties arbitrarily across mankind. You buy some with your preferred currency (EUR, LTC whatever) when you need to transact in some context conventional money isn't fit for. The transactor is then in a position where he needs to unload the BTC for his day to day currencies of operation. Do you not see how having major actors in the network is good for liquidity? If you use it as medium of exchange mostly, you're fairly isolated from price tampering from the rich and mighty. We've been functioning like this for quite some time now. Risks from exchange value falling or physical exchange robbing you are close to nil if you manage your inventory and trades appropriately.
- schmichael 11y ago
  Any fees above $0.01 make microtransactions unlikely. Maybe not a bad thing though. However, if fees hit the $0.30 and up range they stop losing their competitive edge against credit cards. If consumer retail on the Bitcoin blockchain isn't a concern for you (as it doesn't appear to be for Bitcoin Core), then high fees aren't an issue. If consumer retail is a use case you want for Bitcoin, fees need to stay low to offset Bitcoin's other disadvantages against credit cards. That being said high fees don't negatively affect the main retail use cases Bitcoin has demonstrated the best suitably for: cryptolocker payments and contraband.
  - nadaviv 11y ago
    We're still quite off from $0.30, though. At the peak of the recent transaction flood attack, you only had to pay $0.06 (60 satoshis/byte for a 250 byte tx) for a 90% chance to get including in the upcoming block. Now, that the attack has somewhat calmed down, we're down to the $0.04-$0.05 range, and will probably continue going down over time. > as it doesn't appear to be for Bitcoin Core Source? Core has shown a very promising roadmap for scaling the bitcoin network. This includes SegWit, which gives us a 170%-400% capacity bump without requiring a network-wide upgrade (at the risk of splitting the payment network and currency in two if everyone doesn't upgrade in time), work on IBLT/weakblocks to improve network propagation times and bandwidth usage, and research on compressing data more efficiently [0]. Several of the Bitcoin Core members have also committed to working on an hard-fork to raise the block size [1], propose it to the development community and try to build consensus around that. In addition to that, Blockstream, which was founded by a few of the core developers, is funding work on Lighting Network, a write-cache for bitcoin transactions based on payment channels, which would allow for scalable, instant, nano, near-free payments. [0] https://bitcointalk.org/index.php?topic=1377298.0 https://bitcointalk.org/index.php?topic=1377298.0 [1] https://medium.com/@bitcoinroundtable/bitcoin-roundtable-consensus-266d475a61ff https://medium.com/@bitcoinroundtable/bitcoin-roundtable-con...
    - schmichael 11y ago
      > Source? I was making an inference but one it seems Gavin Andresen agrees with: "Over the last year of trying, and failing, to reach a reasonable compromise, it has become clear to me that some developers don’t want any on-chain scaling solution any time soon. [goes on to reference Lightning]" http://gavinandresen.ninja/satoshi-roundtable-thoughts http://gavinandresen.ninja/satoshi-roundtable-thoughts
- ori_b 11y ago
  The problem is that higher transaction fees don't increase the throughput, they only change priority. Therefore, they work by either shrinking the market size for bitcoin, or by determining which transactions are simply dropped. Neither are things that people seem to want.
- meddlepal 11y ago
  What's wrong with micro transactions?

by pash 11y ago

zdkl 11y ago

Why is it automatically assumed that higher tx fees are bad? It only disincentivises microtransactions on the bitcoin blockchain. There's nothing stopping anyone from using another coin (litecoin springs to mind) for smaller transactions. TL;DR microtransactions discouraged on BTC blockchain? What's the problem?

matt4077 11y ago
1. People want to use bitcoin for transactions. 2. They're priced out of the market. 3. OMG this us so obvious why am I even...
- zdkl 11y ago
  Yeah but it's not as if there weren't literally hundreds of altcoins with enough liquidity to handle the lower end of the tx value scale
  - ori_b 11y ago
    At which point, why is there a need for bitcoin at all?
    - zdkl 11y ago
      Well... There isn't, in the same sense as there's no need for specifically the USD in the grand scheme of things, right?
      - ori_b 11y ago
        Right. But the reason I use USD is because it's what I spend in. If I'm primarily in an area that doesn't use USD, I would avoid holding USD. There's no benefit for the overhead. This is an argument against using bitcoin.
        zdkl 11y ago
        I agree with you, its not for everything but there inherent benefits to the bitcoin protocol/platform. Whether these integrate with your use case is (no offense intended) irrelevant to its properties
rtpg 11y ago
Microtransactions being discouraged on BTC is basically the same as " only big players can afford to interact on BTC " This is basically the same as the nightmare scenario anti-2MB people describe with more centralization. By refusing to fix the protocol you are going to end up with a scenario where small players cannot participate in the block chain.
- zdkl 11y ago
  Well from a casual following of the coin world I'd say the ship has sailed a while ago on centralization. Individual miners represent what, low 2digits percent hashing power? It seems everyone wants to believe so hard bitcoin is the currency you'll buy bubblegum at 25c with, maybe it's more the coin you use for 100s$ type transactions rather? What would be wrong with embracing using other chains? I fail to see anything short of a dynamic altcoin ecosystem to keep the required pseudonymous/microtx/decentralised characteristics alive. I mean bitcoin is great and all but it can't be everything to everyone and that's okay. Let the 'real world' interface on BTC, and we'll interface BTC to what we actually use. As always.
  - ehnto 11y ago
    You conflate people mining with people who could benefit from bitcoin as a uewful currency. The issue your parent comment describes isn't an issue of just usability though, but of market control. If you push out people who can't afford large transactions then you eventually have currency owned and controlled by the few who can afford it. Hardly the original vision of bitcoin. But for everyone else, if I can't buy lunch with it due to high transaction cost then I have no interest in storing any wealth in it either, money is useless if it isn't usable. So if it isn't a currency for buying lunch, and it isn't a currency for storing wealth, what the hell do I use bitcoin for? Pretending to play daytrader at the foreign exchange?
    - zdkl 11y ago
      You'd be a fool to store value in it long-term regardless of target tx value. I'd argue it's main purpose is as "middle currency". It has the potential of acting as synchronization mechanism for any two parties arbitrarily across mankind. You buy some with your preferred currency (EUR, LTC whatever) when you need to transact in some context conventional money isn't fit for. The transactor is then in a position where he needs to unload the BTC for his day to day currencies of operation. Do you not see how having major actors in the network is good for liquidity? If you use it as medium of exchange mostly, you're fairly isolated from price tampering from the rich and mighty. We've been functioning like this for quite some time now. Risks from exchange value falling or physical exchange robbing you are close to nil if you manage your inventory and trades appropriately.
schmichael 11y ago
Any fees above $0.01 make microtransactions unlikely. Maybe not a bad thing though. However, if fees hit the $0.30 and up range they stop losing their competitive edge against credit cards. If consumer retail on the Bitcoin blockchain isn't a concern for you (as it doesn't appear to be for Bitcoin Core), then high fees aren't an issue. If consumer retail is a use case you want for Bitcoin, fees need to stay low to offset Bitcoin's other disadvantages against credit cards. That being said high fees don't negatively affect the main retail use cases Bitcoin has demonstrated the best suitably for: cryptolocker payments and contraband.
- nadaviv 11y ago
  We're still quite off from $0.30, though. At the peak of the recent transaction flood attack, you only had to pay $0.06 (60 satoshis/byte for a 250 byte tx) for a 90% chance to get including in the upcoming block. Now, that the attack has somewhat calmed down, we're down to the $0.04-$0.05 range, and will probably continue going down over time. > as it doesn't appear to be for Bitcoin Core Source? Core has shown a very promising roadmap for scaling the bitcoin network. This includes SegWit, which gives us a 170%-400% capacity bump without requiring a network-wide upgrade (at the risk of splitting the payment network and currency in two if everyone doesn't upgrade in time), work on IBLT/weakblocks to improve network propagation times and bandwidth usage, and research on compressing data more efficiently [0]. Several of the Bitcoin Core members have also committed to working on an hard-fork to raise the block size [1], propose it to the development community and try to build consensus around that. In addition to that, Blockstream, which was founded by a few of the core developers, is funding work on Lighting Network, a write-cache for bitcoin transactions based on payment channels, which would allow for scalable, instant, nano, near-free payments. [0] https://bitcointalk.org/index.php?topic=1377298.0 https://bitcointalk.org/index.php?topic=1377298.0 [1] https://medium.com/@bitcoinroundtable/bitcoin-roundtable-consensus-266d475a61ff https://medium.com/@bitcoinroundtable/bitcoin-roundtable-con...
  - schmichael 11y ago
    > Source? I was making an inference but one it seems Gavin Andresen agrees with: "Over the last year of trying, and failing, to reach a reasonable compromise, it has become clear to me that some developers don’t want any on-chain scaling solution any time soon. [goes on to reference Lightning]" http://gavinandresen.ninja/satoshi-roundtable-thoughts http://gavinandresen.ninja/satoshi-roundtable-thoughts
ori_b 11y ago
The problem is that higher transaction fees don't increase the throughput, they only change priority. Therefore, they work by either shrinking the market size for bitcoin, or by determining which transactions are simply dropped. Neither are things that people seem to want.
meddlepal 11y ago
What's wrong with micro transactions?