4 ms·

> Cryptocurrencies like Bitcoin are already trustless – any machine can accept it from any other, securely. They are (nearly) free. I believe it currently cost

> Cryptocurrencies like Bitcoin are already trustless – any machine can accept it from any other, securely. They are (nearly) free. I believe it currently costs ~$1.50 in fees for a single Bitcoin transaction, assuming you want it confirmed reasonably quickly. Not what I would call nearly free!

hdhzy 9y ago
Could you tell where did you get that fee from? According to this thread [0] the recommended fee is 0.0001 BTC that'd be $0.20. Of course if you have a non standard transaction the recommended fee will vary. [0]: https://bitcointalk.org/index.php?topic=245552.msg2618635#msg2618635 https://bitcointalk.org/index.php?topic=245552.msg2618635#ms... > assuming you want it confirmed reasonably quickly Generally it takes 10 minutes to mine a block so even with a very high fee you won't have it accepted in seconds (except for a pure luck situation where you send a transaction, miner takes it and immediately finds a block). Personally I wouldn't think fees are a big deal now that miners rely mainly on coinbase transactions (getting BTC just for mining a block). Fees will play a big role when miners stop creating BTC out of thin air and will have to survive on fees only.
- BillinghamJ 9y ago
  See e.g. https://estimatefee.com https://estimatefee.com If this continues as it is now, once mining blocks no longer creates new bitcoins, we'll surely be looking at fees of $100+ for confirmation within 24 hours.
  - emagdnim2100 9y ago
    This may be a misconception - a decrease in the rewards paid to miners wouldn't obviously be "made up for" by an increase in transaction fees. The fee is basically a bid to be included in the next 1MB block, so it should be a pure product of transaction volume (and, of course, the BTC/USD exchange rate by extension). However, I agree that both the transaction volume and the exchange rate are likely to continue increasing. But, if I'm missing something, it would be interesting to know!
- mechanical_berk 9y ago
  I got it from https://bitcoinfees.21.com https://bitcoinfees.21.com "The fastest and cheapest transaction fee is currently 330 satoshis/byte, shown in green at the top. For the median transaction size of 226 bytes, this results in a fee of 74,580 satoshis." 74,580 satoshis is currently ~$1.50. As you and b1daly point out the majority of the cost of running Bitcoin is currently paid for by mining rewards, but even so the fees are still crazy! I don't know what will happen when the mining reward disappears. There will surely be far fewer miners, which will decrease the real-world cost of mining a block (and also decrease the security of the system!) If proof-of-stake or something like it is ever adopted then presumably the cost of running the system will plummet but I'm not familiar enough with that stuff to say much more.
  - hdhzy 9y ago
    > There will surely be far fewer miners, which will decrease the real-world cost of mining a block (and also decrease the security of the system!) Maybe it'll end up with bigger amount of smaller miners. Now the cost of entering mining is high but when the incentives will be smaller Bitcoin mining may end up where it begun - on small hardware. If fees sky rocket nobody would be using it. One way or another that'll be interesting times...
    - mechanical_berk 9y ago
      So I've thought about this a bit. Assume there are a fixed number of transactions per block (N), but a greater number of potential transactions that people would like to do. Also assume that there is a maximum percentage (of transaction amount) that people will be willing to pay as a fee (F). Then I think the transaction fee should tend to F * average amount of Nth largest potential transaction in a block window. The cost of mining a block ought to tend to just less than the average block payout (reward + fees). When the reward disappears, this will happen as miners shut down due to not being able to make a profit and the mining difficulty decreases. Only the most efficient miners will survive. I think this means a few big miners, rather than many small miners, as big miners are almost certainly more efficient.
DennisP 9y ago
Yes, but that's not an inherent problem with the technology. It's the result of a hardcoded throughput limit which, so far, they haven't been able to remove for political reasons. Just removing that limit wouldn't let Bitcoin grow much further anyway, but there are all sorts of technologies in development that could take cryptocurrencies to massive scale, including the Lightning network, Ethereum's sharded proof-of-stake, DFinity's threshold signatures, Mimblewimble, and others.

hdhzy 9y ago

Could you tell where did you get that fee from? According to this thread [0] the recommended fee is 0.0001 BTC that'd be $0.20. Of course if you have a non standard transaction the recommended fee will vary. [0]: https://bitcointalk.org/index.php?topic=245552.msg2618635#msg2618635 https://bitcointalk.org/index.php?topic=245552.msg2618635#ms... > assuming you want it confirmed reasonably quickly Generally it takes 10 minutes to mine a block so even with a very high fee you won't have it accepted in seconds (except for a pure luck situation where you send a transaction, miner takes it and immediately finds a block). Personally I wouldn't think fees are a big deal now that miners rely mainly on coinbase transactions (getting BTC just for mining a block). Fees will play a big role when miners stop creating BTC out of thin air and will have to survive on fees only.

BillinghamJ 9y ago
See e.g. https://estimatefee.com https://estimatefee.com If this continues as it is now, once mining blocks no longer creates new bitcoins, we'll surely be looking at fees of $100+ for confirmation within 24 hours.
- emagdnim2100 9y ago
  This may be a misconception - a decrease in the rewards paid to miners wouldn't obviously be "made up for" by an increase in transaction fees. The fee is basically a bid to be included in the next 1MB block, so it should be a pure product of transaction volume (and, of course, the BTC/USD exchange rate by extension). However, I agree that both the transaction volume and the exchange rate are likely to continue increasing. But, if I'm missing something, it would be interesting to know!
mechanical_berk 9y ago
I got it from https://bitcoinfees.21.com https://bitcoinfees.21.com "The fastest and cheapest transaction fee is currently 330 satoshis/byte, shown in green at the top. For the median transaction size of 226 bytes, this results in a fee of 74,580 satoshis." 74,580 satoshis is currently ~$1.50. As you and b1daly point out the majority of the cost of running Bitcoin is currently paid for by mining rewards, but even so the fees are still crazy! I don't know what will happen when the mining reward disappears. There will surely be far fewer miners, which will decrease the real-world cost of mining a block (and also decrease the security of the system!) If proof-of-stake or something like it is ever adopted then presumably the cost of running the system will plummet but I'm not familiar enough with that stuff to say much more.
- hdhzy 9y ago
  > There will surely be far fewer miners, which will decrease the real-world cost of mining a block (and also decrease the security of the system!) Maybe it'll end up with bigger amount of smaller miners. Now the cost of entering mining is high but when the incentives will be smaller Bitcoin mining may end up where it begun - on small hardware. If fees sky rocket nobody would be using it. One way or another that'll be interesting times...
  - mechanical_berk 9y ago
    So I've thought about this a bit. Assume there are a fixed number of transactions per block (N), but a greater number of potential transactions that people would like to do. Also assume that there is a maximum percentage (of transaction amount) that people will be willing to pay as a fee (F). Then I think the transaction fee should tend to F * average amount of Nth largest potential transaction in a block window. The cost of mining a block ought to tend to just less than the average block payout (reward + fees). When the reward disappears, this will happen as miners shut down due to not being able to make a profit and the mining difficulty decreases. Only the most efficient miners will survive. I think this means a few big miners, rather than many small miners, as big miners are almost certainly more efficient.

DennisP 9y ago

Yes, but that's not an inherent problem with the technology. It's the result of a hardcoded throughput limit which, so far, they haven't been able to remove for political reasons. Just removing that limit wouldn't let Bitcoin grow much further anyway, but there are all sorts of technologies in development that could take cryptocurrencies to massive scale, including the Lightning network, Ethereum's sharded proof-of-stake, DFinity's threshold signatures, Mimblewimble, and others.