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The high transaction fees are forcing Bitcoin in this direction. If buying a hamburger cost you $30 in fees on top of the $6 burger, you'd stop using dollars fo

by pc2g4d 9y ago

The high transaction fees are forcing Bitcoin in this direction. If buying a hamburger cost you $30 in fees on top of the $6 burger, you'd stop using dollars for everyday purchases, too. Seems we're stuck in this situation so long as the block size remains where it is. That artificially reduces the supply of transactions, forcing the price up. No matter how many miners there are competing for those transaction fees, there can never be more transactions. The transaction market is really one half of a market, or a market with a "supply ceiling". It's ironic that Bitcoin's transaction count is essentially limited _by fiat_---by fiat of the Bitcoin code that implements the block limit. But given the relative failure of forks that increase that block limit, it seems Bitcoin is what it is and other coins will have to pick up that slack.

pkulak 9y ago
No one who owns BTC wants it used for transactions. They want it to be an investment and go up forever, so they'll never go with a fork that allows it. It's like home owners in a neighborhood locking out new construction so their own homes raise in value.
- tylersmith 9y ago
  That's a pretty broad generalization. Many of us work very hard to make Bitcoin usable for day-to-day transactions.
  - zaphar 9y ago
    Sometimes a broad generalization is generally applicable even if not always specifically applicable.
- zbentley 9y ago
  You know, that's quite insightful. HOAs (Home Owners' Associations) are also responsible for some pretty egregious local/municipal legislative blockage as well.
- mikeash 9y ago
  Seems like the miners have a strong incentive to keep the "supply" of transactions artificially limited too, since it results in sky-high transaction fees for them.
- r00fus 9y ago
  Those who want an appreciable asset own it, those who want transactions use it.
- dawhizkid 9y ago
  Of course Bitcoin is the digital crypto analogy for SF Bay Area NIMBYism :)
  - Balgair 9y ago
    Christ, that's some deep snark!
- QML 9y ago
  But that was the original goal of Bitcoin — the paper states specifically transaxtions. I personally found it interesting when I bought shoes over Overstock via BTC earlier this year; only problem was my phone didn’t have a default QR scanner.
  - t0mbstone 9y ago
    The original goal was to have transaction fees cover network processing costs, but anyone who does the math can quickly see that the number of transactions allowed by the current block size is an issue, and prevents bitcoin from scaling to visa/mastercard levels of usage. The reason why this flaw was accepted back then was because "space is cheap", and "we can always make the blocks bigger later". Basically, it was a known issue all along, and the plan all along was to evolve as needed. It was never intended to be a perfect solution from the get-go. The problem now, is that people are actively preventing bitcoin from evolving.
    - bb88 9y ago
      > The problem now, is that people are actively preventing bitcoin from evolving. So an 'evolving' BTC market is not a stable market. Doing something that increases the transaction speed is good, but doing something that changes the fundamental rules is not. If your income is based upon artificial scarcity, then you're going to be invested in keeping it that way.
- SamPatt 9y ago
  I own bitcoin (and have for nearly five years) and I want it to be spendable as a currency again.
- daddosi 9y ago
  It realy seems the libertarian utopia story the way non libertarians envision it. The main joke is satosi's people skills. A coin needs a community to launch it. It wil forever be asociated with it. Ponzi coin wil stay ponzi coin, porn coin wil stay porn coin etc
- level09 9y ago
  >they'll never go with a fork that allows it Actually, I think that people would race to buy BTC before any fork, in order to get free money. (that explains why BCH has that volume/market)
vintageseltzer 9y ago
The Lightning Network is meant to address this: https://lightning.network/ https://lightning.network/
- owenversteeg 9y ago
  Lightning ultimately has to come into contact with Bitcoin at some point, unfortunately. Even if you just have one Bitcoin transaction a month, I'm paying $20/month at the current tx prices just to be able to use Bitcoin. $240/year. Does that sound anywhere near reasonable to you?
  - wereHamster 9y ago
    The goal is that there will be fewer BTC transactions once LN becomes widespread, especially if people or institutions open long-lived channels between each other (active for months, years, or even indefinitely). Then you'd only have to hit the BTC blockchain a few times a year, at most, and that's a level of transactions which the BTC blockchain can easily handle, even if the whole world population uses it for everyday trading. However I also expect that fees will go down once this craze is over (in a few days hopefully). They have tripled in the past three days (see https://fork.lol/tx/fee https://fork.lol/tx/fee).
    - owenversteeg 9y ago
      Let's say "a few times a year" is once every two and a half months. Everyone who wanted to use Bitcoin would then have to pay about $100 a year to use it at today's rates. That's still ridiculous. And fees have increased mostly because the price increased. If people actually started using Bitcoin, the price would skyrocket and fees would rise even higher.
      - SamPatt 9y ago
        The fees have increased because there's not enough space in the blocks. The price increase would be irrelevant if there was enough space in blocks.
sf_rob 9y ago
In theory segwit and offchain settlement layers (namely Lightning) can/will speed things up/reduce fees without raising the block limit. FWIW I think that they should have done both.
deleted 9y ago
[deleted]
mirimir 9y ago
> If buying a hamburger cost you $30 in fees on top of the $6 burger, you'd stop using dollars for everyday purchases, too. Or maybe you'd buy a few month's worth of burgers.
- jhiska 9y ago
  But then they'd spoil!
  - mirimir 9y ago
    I meant as subscriptions.
    - grigjd3 9y ago
      What an awful limitation. I may not want a burger next week.
      - mirimir 9y ago
        OK, Bitcoin-backed debit cards.
        PeterisP 9y ago
        Who cares about what they're backed with? If it's not bitcoin, then you don't get the benefits of bitcoin. The only difference between a normal debit card and a bitcoin-backed debit card is that the bitcoin backing layer is more expensive than the usual one.
        mirimir 9y ago
        You get at least one benefit. You can keep your large-scale financial life as private as you like. Not as well as with the newer privacy-focused cryptocurrencies, of course. And that was arguably a key goal for Bitcoin. It came up in the shadow of ecash and e-gold. Although it's not as decentralized as many expected, it's also far less vulnerable to government takedown than ecash and e-gold were. But sadly, it's no less vulnerable to speculation than any other small currency has been.
bb88 9y ago
> But given the relative failure of forks that increase that block limit, it seems Bitcoin is what it is and other coins will have to pick up that slack. So here's a question. Should a miner move to a fork that decreases the block limit? Would it be more beneficial or less beneficial for a miner?
curyous 9y ago
This is all fixed with Bitcoin Cash.

by pc2g4d 9y ago

pkulak 9y ago

No one who owns BTC wants it used for transactions. They want it to be an investment and go up forever, so they'll never go with a fork that allows it. It's like home owners in a neighborhood locking out new construction so their own homes raise in value.

tylersmith 9y ago
That's a pretty broad generalization. Many of us work very hard to make Bitcoin usable for day-to-day transactions.
- zaphar 9y ago
  Sometimes a broad generalization is generally applicable even if not always specifically applicable.
zbentley 9y ago
You know, that's quite insightful. HOAs (Home Owners' Associations) are also responsible for some pretty egregious local/municipal legislative blockage as well.
mikeash 9y ago
Seems like the miners have a strong incentive to keep the "supply" of transactions artificially limited too, since it results in sky-high transaction fees for them.
r00fus 9y ago
Those who want an appreciable asset own it, those who want transactions use it.
dawhizkid 9y ago
Of course Bitcoin is the digital crypto analogy for SF Bay Area NIMBYism :)
- Balgair 9y ago
  Christ, that's some deep snark!
QML 9y ago
But that was the original goal of Bitcoin — the paper states specifically transaxtions. I personally found it interesting when I bought shoes over Overstock via BTC earlier this year; only problem was my phone didn’t have a default QR scanner.
- t0mbstone 9y ago
  The original goal was to have transaction fees cover network processing costs, but anyone who does the math can quickly see that the number of transactions allowed by the current block size is an issue, and prevents bitcoin from scaling to visa/mastercard levels of usage. The reason why this flaw was accepted back then was because "space is cheap", and "we can always make the blocks bigger later". Basically, it was a known issue all along, and the plan all along was to evolve as needed. It was never intended to be a perfect solution from the get-go. The problem now, is that people are actively preventing bitcoin from evolving.
  - bb88 9y ago
    > The problem now, is that people are actively preventing bitcoin from evolving. So an 'evolving' BTC market is not a stable market. Doing something that increases the transaction speed is good, but doing something that changes the fundamental rules is not. If your income is based upon artificial scarcity, then you're going to be invested in keeping it that way.
SamPatt 9y ago
I own bitcoin (and have for nearly five years) and I want it to be spendable as a currency again.
daddosi 9y ago
It realy seems the libertarian utopia story the way non libertarians envision it. The main joke is satosi's people skills. A coin needs a community to launch it. It wil forever be asociated with it. Ponzi coin wil stay ponzi coin, porn coin wil stay porn coin etc
level09 9y ago
>they'll never go with a fork that allows it Actually, I think that people would race to buy BTC before any fork, in order to get free money. (that explains why BCH has that volume/market)

vintageseltzer 9y ago

The Lightning Network is meant to address this: https://lightning.network/ https://lightning.network/

owenversteeg 9y ago
Lightning ultimately has to come into contact with Bitcoin at some point, unfortunately. Even if you just have one Bitcoin transaction a month, I'm paying $20/month at the current tx prices just to be able to use Bitcoin. $240/year. Does that sound anywhere near reasonable to you?
- wereHamster 9y ago
  The goal is that there will be fewer BTC transactions once LN becomes widespread, especially if people or institutions open long-lived channels between each other (active for months, years, or even indefinitely). Then you'd only have to hit the BTC blockchain a few times a year, at most, and that's a level of transactions which the BTC blockchain can easily handle, even if the whole world population uses it for everyday trading. However I also expect that fees will go down once this craze is over (in a few days hopefully). They have tripled in the past three days (see https://fork.lol/tx/fee https://fork.lol/tx/fee).
  - owenversteeg 9y ago
    Let's say "a few times a year" is once every two and a half months. Everyone who wanted to use Bitcoin would then have to pay about $100 a year to use it at today's rates. That's still ridiculous. And fees have increased mostly because the price increased. If people actually started using Bitcoin, the price would skyrocket and fees would rise even higher.
    - SamPatt 9y ago
      The fees have increased because there's not enough space in the blocks. The price increase would be irrelevant if there was enough space in blocks.

sf_rob 9y ago

In theory segwit and offchain settlement layers (namely Lightning) can/will speed things up/reduce fees without raising the block limit. FWIW I think that they should have done both.

deleted 9y ago

[deleted]

mirimir 9y ago

> If buying a hamburger cost you $30 in fees on top of the $6 burger, you'd stop using dollars for everyday purchases, too. Or maybe you'd buy a few month's worth of burgers.

jhiska 9y ago
But then they'd spoil!
- mirimir 9y ago
  I meant as subscriptions.
  - grigjd3 9y ago
    What an awful limitation. I may not want a burger next week.
    - mirimir 9y ago
      OK, Bitcoin-backed debit cards.
      - PeterisP 9y ago
        Who cares about what they're backed with? If it's not bitcoin, then you don't get the benefits of bitcoin. The only difference between a normal debit card and a bitcoin-backed debit card is that the bitcoin backing layer is more expensive than the usual one.
        mirimir 9y ago
        You get at least one benefit. You can keep your large-scale financial life as private as you like. Not as well as with the newer privacy-focused cryptocurrencies, of course. And that was arguably a key goal for Bitcoin. It came up in the shadow of ecash and e-gold. Although it's not as decentralized as many expected, it's also far less vulnerable to government takedown than ecash and e-gold were. But sadly, it's no less vulnerable to speculation than any other small currency has been.

bb88 9y ago

> But given the relative failure of forks that increase that block limit, it seems Bitcoin is what it is and other coins will have to pick up that slack. So here's a question. Should a miner move to a fork that decreases the block limit? Would it be more beneficial or less beneficial for a miner?

curyous 9y ago

This is all fixed with Bitcoin Cash.