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It seems like the main issue is transaction fees are close to $20, so even simple operations like refunding users for a incorrect or incomplete transaction is i

It seems like the main issue is transaction fees are close to $20, so even simple operations like refunding users for a incorrect or incomplete transaction is infeasible.

Klathmon 9y ago
The "$20 transaction fee" was an absolute top, and when that happened it was the single most congested the bitcoin network has ever been. It's nowhere near that right now. The total cost for your "median" transaction right now (at 226 bytes) is about $4.30 USD (at 150 sat/byte). Even if you double that to 300 sat/byte you are still at ~$9. Edit: I'm not saying even $4 fees are okay, just pointing out that it's not $20. I agree with steam's decision here, and it's something that Bitcoin needs to solve before it can really be useful as a payment system.
- niij 9y ago
  When did $4.30 transaction fees become even close to acceptable. I thought high TX fees was one of the things Bitcoin was purported to solve.
  - Klathmon 9y ago
    I'm not saying they are acceptable, i'm saying that $20 fees per average transaction isn't true in all cases except once in the history of bitcoin.
    - ceejayoz 9y ago
      Is there reason to believe that sort of congestion won't reoccur?
      - mrgordon 9y ago
        Every major blockchain is working on scalability (sharding, offchain transactions, and various other solutions are in the works) So ideally there will be more traffic but less congestion
        Tepix 9y ago
        I think Bitcoin has maneuvered itself into a corner where the remaining dev team doesn't dare to do any hardforks in the future even if they are important to keep Bitcoin competitive.
      - Klathmon 9y ago
        There is zero reason to believe that, and I'd even go so far as to say it WILL happen again, and probably soon. There are solutions being worked on, but they are not ready for primetime yet.
  - eterm 9y ago
    My bank charges nothing for instant transfers of up to £10,000. That's both cheaper than and faster than bitcoin. (And this isn't a cost hidden in a perk of a monthly fee, there's no monthly account fee either.) I'm pretty sure if Satoshi re-appeared "he" would be lamenting those artificially keeping the blocksize small. The 2MB limit was put in as a temporary solution to a problem of too many worthless transactions. Bitcoin has the opposite problem now.
    - emj 9y ago
      Does that stand for transfers over (nation) state borders as well?
      - patrickk 9y ago
        Yes, at least in the SEPA area (EU, plus countries in the EU orbit): https://en.wikipedia.org/wiki/Single_Euro_Payments_Area#Coverage https://en.wikipedia.org/wiki/Single_Euro_Payments_Area#Cove... As a means of payment in the SEPA region, Bitcoin is far worse on cost (free vs $5-10 in my experience), and sometimes worse on speed (1 - 1.5 business days for SEPA to clear). So in this geographic area, Bitcoin is literally losing to a combination of the legacy banking system, and a huge, multi country, multi lingual, somewhat unwieldy bureaucracy.
        emj 9y ago
        That is still an EU payment system, which has improved a lot since the start of Bitcoin. I just need to transfer money to strange places and banks are pretty often crappy at that stuff, best solution I have is to send my credit card around the world.
        patrickk 9y ago
        > That is still an EU payment system, which has improved a lot since the start of Bitcoin. Which shows how pathetic the main development team behind Bitcoin is (the core team). The fact that they haven't managed to fix problems that are years old and steadily getting worse is inexcusable. It should be a walk in the park for them to out compete a massive, political entity like the EU and the traditional banking sector. I hear you on the "strange places", that was where BTC was supposed to shine. It hasn't made any inroads into underserved markets that I'm aware of, e.g. less well-off countries and unbanked people. That is a pipe dream as long as the fees are so high to move funds around.
  - speedplane 9y ago
    It will certainly be interesting if bitcoin fails because it is less efficient than humans.
- bigtunacan 9y ago
  How are these transaction fee amounts even determined? With something like credit cards, PayPal, or EFT the fees are deterministic. With Bitcoin it seems fees are both ridiculously high, plus I can't even tell what I am going to be charged?
  - Klathmon 9y ago
    When you make a bitcoin transaction, it gets put into a "mempool". Basically you send your TX to a node, that shares it with other nodes on the network, and they all hold it in memory. Once a block is found, the miner that found the block will pull as many transactions as possible from the mempool and put them into that block and sign it on the blockchain forever. Since TX fees go to miners, they are incentivized to pick the transactions with the largest "fee per size" to include first to maximize their profit (though they aren't required to do so). So basically you can envision all transactions as a stack, with the highest fees at the top. Once a block is found, it takes the top ~1MB worth of transactions, and the cycle repeats. [0] is a good visual representation of this. Unfortunately this means there isn't an easy way to determine what fee will absolutely get you included in a block before it's mined, since if thousands of transactions show up with higher fees than yours after you (but before a block is mined) yours might not make it in the next block (even if your fee was the highest when you made the transaction). It's a tough problem to solve, but there are some solutions being worked on to help solve this problem for the vast majority of bitcoin transactions. [0]https://core.jochen-hoenicke.de/queue/#24h https://core.jochen-hoenicke.de/queue/#24h
    - simpsond 9y ago
      I don’t understand why miners wouldn’t include all pending transactions in their block. Seeing as how pow is a guessing game, there are plenty of permutations of the Merkle tree to generate plenty of roots. I guess to dissencentivize free loaders so miners can continue to make money once Coinbase txns are no longer a thing? It’s certainly not free to mine!
      - Bootvis 9y ago
        The number of transactions that can be included in a block is limited. A block is generated on average 10 minutes (a bit quicker due to increasing hash rate) so the number of transactions in an hour is also limited. Naturally the transactions that pay most to the miners are getting selected by them and included in these blocks.
- Kelbit 9y ago
  Meanwhile, Visa is about 1.5-2% plus $0.10 flat interchange. To break even with BTC against Visa, we're talking an average transaction of over $200. That's not feasible for the vast majority of merchants. Not to mention that the currency's extreme volatility means that when you sell it to convert it to greenbacks (the currency your investors actually care about) it probably won't be the same amount you were paid for.
  - Klathmon 9y ago
    Yes, but at the same time Visa requires you to hand over your payment information to each and every merchant you transact with, and they are able to pull as much money from your card as they want, and they are able to charge you multiple times at any point in the future. But there are some really cool solutions being worked on right now for this problem in bitcoin that can make it scale to a similar way to Visa. But they aren't here yet (and some might turn out to be nonviable). Lightning network would allow Visa levels of transactions per second, at basically zero or next to zero fees per transaction for the majority of them.
    - blibble 9y ago
      cardholders are not liable for unauthorised transactions by merchants any merchant that commits that sort of fraud repeatedly will have their account terminated
      - em3rgent0rdr 9y ago
        Thankfully we have nice companies like equifax which help secure our details /s.
        darpa_escapee 9y ago
        Online wallets and exchanges are similar points of failure. Many users have uploaded their picture IDs, banking and tax information to sites like LocalBitcoins.
- s73ver_ 9y ago
  But it still happened, and there's really nothing in place to stop it from happening again. And Valve would have no control over it.
XR0CSWV3h3kZWg 9y ago
I've had to pay tx fees of ~$5 twice recently. The second $5 fee was to move my coins to a segwit address. Now the fees are under $1 again, i.e. actually viable for many real world txs again.

It seems like the main issue is transaction fees are close to $20, so even simple operations like refunding users for a incorrect or incomplete transaction is infeasible.

Klathmon 9y ago

The "$20 transaction fee" was an absolute top, and when that happened it was the single most congested the bitcoin network has ever been. It's nowhere near that right now. The total cost for your "median" transaction right now (at 226 bytes) is about $4.30 USD (at 150 sat/byte). Even if you double that to 300 sat/byte you are still at ~$9. Edit: I'm not saying even $4 fees are okay, just pointing out that it's not $20. I agree with steam's decision here, and it's something that Bitcoin needs to solve before it can really be useful as a payment system.

niij 9y ago
When did $4.30 transaction fees become even close to acceptable. I thought high TX fees was one of the things Bitcoin was purported to solve.
- Klathmon 9y ago
  I'm not saying they are acceptable, i'm saying that $20 fees per average transaction isn't true in all cases except once in the history of bitcoin.
  - ceejayoz 9y ago
    Is there reason to believe that sort of congestion won't reoccur?
    - mrgordon 9y ago
      Every major blockchain is working on scalability (sharding, offchain transactions, and various other solutions are in the works) So ideally there will be more traffic but less congestion
      - Tepix 9y ago
        I think Bitcoin has maneuvered itself into a corner where the remaining dev team doesn't dare to do any hardforks in the future even if they are important to keep Bitcoin competitive.
    - Klathmon 9y ago
      There is zero reason to believe that, and I'd even go so far as to say it WILL happen again, and probably soon. There are solutions being worked on, but they are not ready for primetime yet.
- eterm 9y ago
  My bank charges nothing for instant transfers of up to £10,000. That's both cheaper than and faster than bitcoin. (And this isn't a cost hidden in a perk of a monthly fee, there's no monthly account fee either.) I'm pretty sure if Satoshi re-appeared "he" would be lamenting those artificially keeping the blocksize small. The 2MB limit was put in as a temporary solution to a problem of too many worthless transactions. Bitcoin has the opposite problem now.
  - emj 9y ago
    Does that stand for transfers over (nation) state borders as well?
    - patrickk 9y ago
      Yes, at least in the SEPA area (EU, plus countries in the EU orbit): https://en.wikipedia.org/wiki/Single_Euro_Payments_Area#Coverage https://en.wikipedia.org/wiki/Single_Euro_Payments_Area#Cove... As a means of payment in the SEPA region, Bitcoin is far worse on cost (free vs $5-10 in my experience), and sometimes worse on speed (1 - 1.5 business days for SEPA to clear). So in this geographic area, Bitcoin is literally losing to a combination of the legacy banking system, and a huge, multi country, multi lingual, somewhat unwieldy bureaucracy.
      - emj 9y ago
        That is still an EU payment system, which has improved a lot since the start of Bitcoin. I just need to transfer money to strange places and banks are pretty often crappy at that stuff, best solution I have is to send my credit card around the world.
        patrickk 9y ago
        > That is still an EU payment system, which has improved a lot since the start of Bitcoin. Which shows how pathetic the main development team behind Bitcoin is (the core team). The fact that they haven't managed to fix problems that are years old and steadily getting worse is inexcusable. It should be a walk in the park for them to out compete a massive, political entity like the EU and the traditional banking sector. I hear you on the "strange places", that was where BTC was supposed to shine. It hasn't made any inroads into underserved markets that I'm aware of, e.g. less well-off countries and unbanked people. That is a pipe dream as long as the fees are so high to move funds around.
- speedplane 9y ago
  It will certainly be interesting if bitcoin fails because it is less efficient than humans.
bigtunacan 9y ago
How are these transaction fee amounts even determined? With something like credit cards, PayPal, or EFT the fees are deterministic. With Bitcoin it seems fees are both ridiculously high, plus I can't even tell what I am going to be charged?
- Klathmon 9y ago
  When you make a bitcoin transaction, it gets put into a "mempool". Basically you send your TX to a node, that shares it with other nodes on the network, and they all hold it in memory. Once a block is found, the miner that found the block will pull as many transactions as possible from the mempool and put them into that block and sign it on the blockchain forever. Since TX fees go to miners, they are incentivized to pick the transactions with the largest "fee per size" to include first to maximize their profit (though they aren't required to do so). So basically you can envision all transactions as a stack, with the highest fees at the top. Once a block is found, it takes the top ~1MB worth of transactions, and the cycle repeats. [0] is a good visual representation of this. Unfortunately this means there isn't an easy way to determine what fee will absolutely get you included in a block before it's mined, since if thousands of transactions show up with higher fees than yours after you (but before a block is mined) yours might not make it in the next block (even if your fee was the highest when you made the transaction). It's a tough problem to solve, but there are some solutions being worked on to help solve this problem for the vast majority of bitcoin transactions. [0]https://core.jochen-hoenicke.de/queue/#24h https://core.jochen-hoenicke.de/queue/#24h
  - simpsond 9y ago
    I don’t understand why miners wouldn’t include all pending transactions in their block. Seeing as how pow is a guessing game, there are plenty of permutations of the Merkle tree to generate plenty of roots. I guess to dissencentivize free loaders so miners can continue to make money once Coinbase txns are no longer a thing? It’s certainly not free to mine!
    - Bootvis 9y ago
      The number of transactions that can be included in a block is limited. A block is generated on average 10 minutes (a bit quicker due to increasing hash rate) so the number of transactions in an hour is also limited. Naturally the transactions that pay most to the miners are getting selected by them and included in these blocks.
Kelbit 9y ago
Meanwhile, Visa is about 1.5-2% plus $0.10 flat interchange. To break even with BTC against Visa, we're talking an average transaction of over $200. That's not feasible for the vast majority of merchants. Not to mention that the currency's extreme volatility means that when you sell it to convert it to greenbacks (the currency your investors actually care about) it probably won't be the same amount you were paid for.
- Klathmon 9y ago
  Yes, but at the same time Visa requires you to hand over your payment information to each and every merchant you transact with, and they are able to pull as much money from your card as they want, and they are able to charge you multiple times at any point in the future. But there are some really cool solutions being worked on right now for this problem in bitcoin that can make it scale to a similar way to Visa. But they aren't here yet (and some might turn out to be nonviable). Lightning network would allow Visa levels of transactions per second, at basically zero or next to zero fees per transaction for the majority of them.
  - blibble 9y ago
    cardholders are not liable for unauthorised transactions by merchants any merchant that commits that sort of fraud repeatedly will have their account terminated
    - em3rgent0rdr 9y ago
      Thankfully we have nice companies like equifax which help secure our details /s.
      - darpa_escapee 9y ago
        Online wallets and exchanges are similar points of failure. Many users have uploaded their picture IDs, banking and tax information to sites like LocalBitcoins.
s73ver_ 9y ago
But it still happened, and there's really nothing in place to stop it from happening again. And Valve would have no control over it.

XR0CSWV3h3kZWg 9y ago

I've had to pay tx fees of ~$5 twice recently. The second $5 fee was to move my coins to a segwit address. Now the fees are under $1 again, i.e. actually viable for many real world txs again.