5 ms·

In addition to being slow transactions, they're also expensive transactions. https://blockchain.info/charts/cost-per-transaction https://blockchain.info/charts

In addition to being slow transactions, they're also expensive transactions. https://blockchain.info/charts/cost-per-transaction https://blockchain.info/charts/cost-per-transaction Roughly, you're paying the miners. They (half of them) have to mine your transaction into the blockchain and they could be using that time to mine. So your transaction competes against mining time. That's roughly why it's slow and expensive. I'd never use BTC unless the kidnappers demanded it.

wmf 10y ago
Mining is done on ASICs while verifying transactions and building blocks is done on CPUs so they don't really compete. If a transaction includes fees, miners have essentially no reason not to mine it.
- CalChris 10y ago
  CPUs mining that transaction into the blockchain will be even slower than ASICs (100M hashes/sec vs 1G h/sec). Moreover, a LOT of miners have to do this work and it doesn't clear until the last one does the work. This is slow. It's not cheap simply because it's done on cheaper HW.
  - wmf 10y ago
    Mining doesn't work this way at all. I'm not sure how else to say it.
  - apapli 10y ago
    Go read up on bitcoin mining, it's essentially a code-cracking competition between miners but my description doesn't do it justice.
  - uncletammy 10y ago
    They said CPUs are NOT used to mine and it's true. All (successfull) mining is done on ASICs. Also, not every miner must do this work. The transaction "clears" as soon as ONE miner solves the puzzle then includes the transaction in that block. The other miners only have to verify it which takes a only a tiny fraction of the amount of work needed to solve the puzzle. It is slow but it's almost always faster than international (as well as domestic for some of us) wire transfers. Also, there are a lot of people working to make it faster. It's currently a pretty crap currency for most people in the world but it has potential to completely change the world. This potential is reflected in the market cap.
olegkikin 10y ago
That "cost per transaction" chart is misleading. It includes the 25BTC per (roughly) 10 minutes that gets created and is given to the miners. The actual transaction costs are way under a dollar, and it is, by far, the cheapest way to move the money, it's cheaper than the European SEPA, which is normally 0.9 EUR.
- joosters 10y ago
  If you don't include the 25BTC in the costs, you're pretending that the electric costs of running all the bitcoin miners to 'secure' the chain don't exist. Bitcoin is a very expensive and inefficient way of transacting.
  - olegkikin 10y ago
    Yeah, but the miners pay for it, not the users of the network. Thus, it is not a transaction cost, but yeah, it is the cost of running the network. You're confusing the two.
- bestnameever 10y ago
  There are likely to be fees to convert cash into bitcoin and vice versa. I've found that this would up the cost quite a bit but it's possible there are cheaper ways of doing it that I'm not yet aware of.
- wcoenen 10y ago
  Where does that 0.9 euro number come from? I have never seen any charges associated with SEPA transfers.
- pYQAJ6Zm 10y ago
  Just for the record, transfers within the SEPA zone cost me nothing in fees with either of my two banks.
- davidgerard 10y ago
  The cost per transaction is incredibly cheap, if you don't include the cost! The 12.5 BTC per block is given to the miners as incentive to keep mining and verifying the transactions. Also, the cost of mining rapidly converges on 1 BTC per 1 BTC mined (both theoretically and in practice). Thus, that is actually the cost for the bitcoin system to process transactions. (Ignoring for the moment the BIP66 incident and the discovery that many miners were literally not bothering to actually verify the previous block, in order to save a few seconds per block.)
AtheistOfFail 10y ago
Expensive is kinda of misnomer. When you remove the block reward of 25BTC, it's cheaper than most methods of money transfer. I've transfered as much as $1000 for around 2.3c.
- joosters 10y ago
  Everything is cheap when you remove or ignore the running costs...
  - AtheistOfFail 10y ago
    I'll agree the 12.5BTC reward is pretty high but that's spread out across all the users as a "group cost" The network basically decides that providing the last 10 minutes worth of processing power is worth 12.5BTC and amount decreases every 4 years so the "group cost" will drop while the "individual cost" will rise. This is why the "fees are high" issue has come up, Bitcoin just reduced the block subsidy to 12.5BTC as opposed to 25BTC, while in the 50BTC era, transactions were often free of any charges. Even with all of that, an average user will pay less than the credit card fees charged to the shop so most shops would be wise to accept it, even if only to sell it for USD immediately.
  - uncletammy 10y ago
    The block reward "costs" the user only the amount by which the currency is devalued as a result of new coins being introduced (inflation). This cost is tiny and only getting smaller. If you're also counting the costs of running the network, you should call up Visa and ask them how much it costs them for you to be able to buy a cup of coffee with your credit card. The number will be so much higher.
- UncleMeat 10y ago
  And eventually the rewards will vanish and be replaced with transaction fees of the same value. Right now you pay in terms of lost value due to the increased supply of coins. The cost of running the network is the cost of transactions.

wmf 10y ago

Mining is done on ASICs while verifying transactions and building blocks is done on CPUs so they don't really compete. If a transaction includes fees, miners have essentially no reason not to mine it.

CalChris 10y ago
CPUs mining that transaction into the blockchain will be even slower than ASICs (100M hashes/sec vs 1G h/sec). Moreover, a LOT of miners have to do this work and it doesn't clear until the last one does the work. This is slow. It's not cheap simply because it's done on cheaper HW.
- wmf 10y ago
  Mining doesn't work this way at all. I'm not sure how else to say it.
- apapli 10y ago
  Go read up on bitcoin mining, it's essentially a code-cracking competition between miners but my description doesn't do it justice.
- uncletammy 10y ago
  They said CPUs are NOT used to mine and it's true. All (successfull) mining is done on ASICs. Also, not every miner must do this work. The transaction "clears" as soon as ONE miner solves the puzzle then includes the transaction in that block. The other miners only have to verify it which takes a only a tiny fraction of the amount of work needed to solve the puzzle. It is slow but it's almost always faster than international (as well as domestic for some of us) wire transfers. Also, there are a lot of people working to make it faster. It's currently a pretty crap currency for most people in the world but it has potential to completely change the world. This potential is reflected in the market cap.

olegkikin 10y ago

That "cost per transaction" chart is misleading. It includes the 25BTC per (roughly) 10 minutes that gets created and is given to the miners. The actual transaction costs are way under a dollar, and it is, by far, the cheapest way to move the money, it's cheaper than the European SEPA, which is normally 0.9 EUR.

joosters 10y ago
If you don't include the 25BTC in the costs, you're pretending that the electric costs of running all the bitcoin miners to 'secure' the chain don't exist. Bitcoin is a very expensive and inefficient way of transacting.
- olegkikin 10y ago
  Yeah, but the miners pay for it, not the users of the network. Thus, it is not a transaction cost, but yeah, it is the cost of running the network. You're confusing the two.
bestnameever 10y ago
There are likely to be fees to convert cash into bitcoin and vice versa. I've found that this would up the cost quite a bit but it's possible there are cheaper ways of doing it that I'm not yet aware of.
wcoenen 10y ago
Where does that 0.9 euro number come from? I have never seen any charges associated with SEPA transfers.
pYQAJ6Zm 10y ago
Just for the record, transfers within the SEPA zone cost me nothing in fees with either of my two banks.
davidgerard 10y ago
The cost per transaction is incredibly cheap, if you don't include the cost! The 12.5 BTC per block is given to the miners as incentive to keep mining and verifying the transactions. Also, the cost of mining rapidly converges on 1 BTC per 1 BTC mined (both theoretically and in practice). Thus, that is actually the cost for the bitcoin system to process transactions. (Ignoring for the moment the BIP66 incident and the discovery that many miners were literally not bothering to actually verify the previous block, in order to save a few seconds per block.)

AtheistOfFail 10y ago

Expensive is kinda of misnomer. When you remove the block reward of 25BTC, it's cheaper than most methods of money transfer. I've transfered as much as $1000 for around 2.3c.

joosters 10y ago
Everything is cheap when you remove or ignore the running costs...
- AtheistOfFail 10y ago
  I'll agree the 12.5BTC reward is pretty high but that's spread out across all the users as a "group cost" The network basically decides that providing the last 10 minutes worth of processing power is worth 12.5BTC and amount decreases every 4 years so the "group cost" will drop while the "individual cost" will rise. This is why the "fees are high" issue has come up, Bitcoin just reduced the block subsidy to 12.5BTC as opposed to 25BTC, while in the 50BTC era, transactions were often free of any charges. Even with all of that, an average user will pay less than the credit card fees charged to the shop so most shops would be wise to accept it, even if only to sell it for USD immediately.
- uncletammy 10y ago
  The block reward "costs" the user only the amount by which the currency is devalued as a result of new coins being introduced (inflation). This cost is tiny and only getting smaller. If you're also counting the costs of running the network, you should call up Visa and ask them how much it costs them for you to be able to buy a cup of coffee with your credit card. The number will be so much higher.
UncleMeat 10y ago
And eventually the rewards will vanish and be replaced with transaction fees of the same value. Right now you pay in terms of lost value due to the increased supply of coins. The cost of running the network is the cost of transactions.