5 ms·

They go to the miner of the block, which is incentivized to pick the highest paying transactions to put inside the limited block. So yeah, you bid with your fe

by 21 9y ago

They go to the miner of the block, which is incentivized to pick the highest paying transactions to put inside the limited block. So yeah, you bid with your fee against everyone else wanting a transaction in.

ianai 9y ago
Does the cost of a transaction increase as more blocks are found? What makes the transaction fee minimal?
- tuxxy 9y ago
  No, it's essentially a race on the number of users trying to get mined in the block. There is a hard limit to the number of transactions that can fit in a block (1MB, this is the block size). Users who want to get in the immediate next block will pay higher transaction fees to get in it. This raises the average transaction fee and causes others to raise their fee, too.
- 21 9y ago
  There are 100 MB of transactions which want to get in the next block: https://blockchain.info/charts/mempool-size?timespan=all https://blockchain.info/charts/mempool-size?timespan=all But the block is only 1 MB. So 100 times more transactions want in than there is space, thus you need to pay $10 to secure a place for your transaction. Fewer transactions or increased block size would decrease the transaction fee.
  - Empact 9y ago
    More than 100 megs according to this, which also shows the fee strata: https://dedi.jochen-hoenicke.de/queue/more/#24h https://dedi.jochen-hoenicke.de/queue/more/#24h The good news is that at current volumes, the miners are making progress clearing the lower fee transactions. In the next day or two we should start clearing transactions at < 100 satoshis/B. That's one way that average / median transaction fees are misleading in Bitcoin: people paying much lower fees are making transactions, but traders and those moving large sums seem to be willing to over-pay to move their money. In some ways the minimum transaction fee processed is more instructive than the median, because it shows how much did one have to pay to get processed, vs how much dod people in general overpay to ensure their payment was processed.
    - icelancer 9y ago
      Furthermore, tons of "exchanges" in Korea were spamming the mempool with 0-fee transactions, as were some other notorious figures, driving these relatively false mempool statistics way up in order drive up the value of other coins.
      - oh_sigh 9y ago
        What benefit do they get from spamming the exchanges? Is there ever an reason to mine 0-fee transactions?
        icelancer 9y ago
        To get threads like this created about how the mempool is packed and it costs $20 to move BTC from peer-to-peer and to drive media in that direction. For what second-order reason would someone do this? Well, I can think of a few....
        xocyabencl 9y ago
        How can a bunch of no fee transaction attempts cause a $20 market price? It seems like the block would need to be full of transactions with high fees.
        rocqua 9y ago
        By increasing the size of the backlog, you make it seem like high transaction fees will stick around longer. It also exaggerates the immediate issue of bitcoins low transaction rate.
        qsucvatz 9y ago
        Because Bitcoin used to work, and now it doesn't. Bitcoin Cash scales appropriately.
        xorcist 9y ago
        Some miners are likely paid outside the blockchain to pick up certain transactions. It is clear that at least one miner do it systematically but I don't think they have ever divulged who their client is and why they do it.
  - aviv 9y ago
    And people expect Amazon to announce Bitcoin acceptance any day now... lol.
  - xorcist 9y ago
    > But the block is only 1 MB. Do note that this was the maximum allowed size. Many blocks are under that, or even empty. It's completely up to the miner that mines the block. This is probably not something that can easily be changed. The 1 MB maximum size was also true only up to August. New style transactions are allowed to go above that, and inputs and outputs are counted differently towards the limit in order to incentivize transaction defragmentation. It's not relevant to speak of a fixed size cap anymore. If everyone changed transaction type overnight we'd see somewhere around 2 MB blocks, but it is expected that the rules would lead to a change in what transactions are made which would make blocks larger. Especially if things like Lightning transactions are more popular in the future. > thus you need to pay $10 to secure a place for your transaction. That's probably something like the average fee for the past few blocks, but the minimum fee you need to pay is much lower. The exact number is not very relevant however since Bitcoin fluctuates in value, and so does the transaction volume. Note that fees are denominated in Bitcoin. Fees have actually been pretty stable over the long term, but the skyrocketing price of Bitcoin has lead to it not being practical for low-value USD transactions. This was always true, but the minimum value for which it is viable increases as Bitcoin is more valuable.
    - qsucvatz 9y ago
      Fees are skyrocketing in Satoshi: what used to be 1 sat/Byte is now 1000 sat/Byte.
      - xorcist 9y ago
        Not really, unless you count the period that blocks weren't full when you could even send transactions without a fee. Fees today are about 100 sat/b, a multiple of that in times of congestion and lower in the weekends. You never have to pay 1000 sat/b, but you are of course free to subsidize miners however you want. This is roughly the same the fees were in 2013, only that those satoshis of yours are worth so much more USD now. That isn't the whole truth, and those spikes in fees come more often now and spike higher, but the minimum fee to get into a block averaged over a year isn't that much worse now than in 2013. That probably isn't very helpful if you need to transact in times of congestion, or make low value transactions, but it's important to know that netiher 1 nor 1000 sat/b has been reality for some time now, and that you should never talk about fees in USD because that doesn't describe how it works. Another common mistake is to include the value of the transaction when describing fees which misleads people into thinking fees are a percentage of the value transacted which is not the case.
- toomim 9y ago
  The cost is increasing because more people are trying to use Bitcoin, but it has an artificial limit to the number of people who can use it per second. Thus, with increasing demand, and static supply, the fees rise roughly quadratically over time. To reduce the fees, we need to remove that artificial 1mb limit. Here's the main approach to that right now: https://www.bitcoin.com/info/what-is-bitcoin-cash https://www.bitcoin.com/info/what-is-bitcoin-cash
  - icelancer 9y ago
    >To reduce the fees, we need to remove that artificial 1mb limit. Here's the main approach to that right now... Removed the BCH spam link. No, this is NOT the main approach to that. The main approach to that is the Lightning Network, which is not yet in production. Your "main approach" is a hardfork that increases the block size, run by someone who owns the bitcoin.com domain, regularly misrepresents what Bitcoin Cash (bcash) actually is, and goes on live shows yelling obscenities and flashing the middle finger very professionally when these things are pointed out. So, no, Bcash is not the main approach to "fixing" Bitcoin. It is a wholly separate coin with trading volume less than one-third of Bitcoin.
    - relyio 9y ago
      Increasing block size is the low hanging fruit for reducing tx fees. It's a dead-simple idea. You increase the supply side of the fee market and users don't have to compete for transaction finality anymore. It has been implemented and we know it works. Of course, that is only kicking the can down the road and has many caveats. It still has proven effective to complete its goal (minimize tx fees). Lightning networks is a WIP that is months, perhaps years, away from hitting production. As such, I wouldn't call them the "main approach" to scaling except in the mind of core engineers. It might drive tx costs down, it might not, at this stage it is too early to tell for sure. As such, I think OP is right. It is completely fair to say that block size increase is the "main" approach, as in the "the one that we know for sure works right now", to making Bitcoin usable as a payment system. Now on a side note: I don't think you needed to be that aggressive with OP. I won't address the attacks on Roger Ver because it is my belief that attempts at turning a technical debate into politics should be met with contempt.
- fixedfees 9y ago
  Peercoin has fixed transactions fees, for comparison https://github.com/linalouise9/peercoin-marketing/blob/master/bitcoinvspeercoin/english.txt https://github.com/linalouise9/peercoin-marketing/blob/maste...
fizixer 9y ago
Not all of it goes to miners, unless it's a send/receive between individuals. If you want to do any trade with the currency, you have to put it on an exchange, and everytime you put it on (deposit) or take it off (withdraw) the exchange, fees are charged (vary from exchange to exchange, and from currency to currency).
- AgentME 9y ago
  Yeah but those aren't bitcoin transaction fees, those are just the fees for using a service that the service decides to charge. And you only need to deal with an exchange to exchange different types of currencies for each other. If you just want to pay someone with bitcoin, you already have bitcoin, and the recipient just wants bitcoin, then you don't need to involve an exchange.

by 21 9y ago

ianai 9y ago

Does the cost of a transaction increase as more blocks are found? What makes the transaction fee minimal?

tuxxy 9y ago
No, it's essentially a race on the number of users trying to get mined in the block. There is a hard limit to the number of transactions that can fit in a block (1MB, this is the block size). Users who want to get in the immediate next block will pay higher transaction fees to get in it. This raises the average transaction fee and causes others to raise their fee, too.
21 9y ago
There are 100 MB of transactions which want to get in the next block: https://blockchain.info/charts/mempool-size?timespan=all https://blockchain.info/charts/mempool-size?timespan=all But the block is only 1 MB. So 100 times more transactions want in than there is space, thus you need to pay $10 to secure a place for your transaction. Fewer transactions or increased block size would decrease the transaction fee.
- Empact 9y ago
  More than 100 megs according to this, which also shows the fee strata: https://dedi.jochen-hoenicke.de/queue/more/#24h https://dedi.jochen-hoenicke.de/queue/more/#24h The good news is that at current volumes, the miners are making progress clearing the lower fee transactions. In the next day or two we should start clearing transactions at < 100 satoshis/B. That's one way that average / median transaction fees are misleading in Bitcoin: people paying much lower fees are making transactions, but traders and those moving large sums seem to be willing to over-pay to move their money. In some ways the minimum transaction fee processed is more instructive than the median, because it shows how much did one have to pay to get processed, vs how much dod people in general overpay to ensure their payment was processed.
  - icelancer 9y ago
    Furthermore, tons of "exchanges" in Korea were spamming the mempool with 0-fee transactions, as were some other notorious figures, driving these relatively false mempool statistics way up in order drive up the value of other coins.
    - oh_sigh 9y ago
      What benefit do they get from spamming the exchanges? Is there ever an reason to mine 0-fee transactions?
      - icelancer 9y ago
        To get threads like this created about how the mempool is packed and it costs $20 to move BTC from peer-to-peer and to drive media in that direction. For what second-order reason would someone do this? Well, I can think of a few....
        xocyabencl 9y ago
        How can a bunch of no fee transaction attempts cause a $20 market price? It seems like the block would need to be full of transactions with high fees.
        rocqua 9y ago
        By increasing the size of the backlog, you make it seem like high transaction fees will stick around longer. It also exaggerates the immediate issue of bitcoins low transaction rate.
        qsucvatz 9y ago
        Because Bitcoin used to work, and now it doesn't. Bitcoin Cash scales appropriately.
      - xorcist 9y ago
        Some miners are likely paid outside the blockchain to pick up certain transactions. It is clear that at least one miner do it systematically but I don't think they have ever divulged who their client is and why they do it.
- aviv 9y ago
  And people expect Amazon to announce Bitcoin acceptance any day now... lol.
- xorcist 9y ago
  > But the block is only 1 MB. Do note that this was the maximum allowed size. Many blocks are under that, or even empty. It's completely up to the miner that mines the block. This is probably not something that can easily be changed. The 1 MB maximum size was also true only up to August. New style transactions are allowed to go above that, and inputs and outputs are counted differently towards the limit in order to incentivize transaction defragmentation. It's not relevant to speak of a fixed size cap anymore. If everyone changed transaction type overnight we'd see somewhere around 2 MB blocks, but it is expected that the rules would lead to a change in what transactions are made which would make blocks larger. Especially if things like Lightning transactions are more popular in the future. > thus you need to pay $10 to secure a place for your transaction. That's probably something like the average fee for the past few blocks, but the minimum fee you need to pay is much lower. The exact number is not very relevant however since Bitcoin fluctuates in value, and so does the transaction volume. Note that fees are denominated in Bitcoin. Fees have actually been pretty stable over the long term, but the skyrocketing price of Bitcoin has lead to it not being practical for low-value USD transactions. This was always true, but the minimum value for which it is viable increases as Bitcoin is more valuable.
  - qsucvatz 9y ago
    Fees are skyrocketing in Satoshi: what used to be 1 sat/Byte is now 1000 sat/Byte.
    - xorcist 9y ago
      Not really, unless you count the period that blocks weren't full when you could even send transactions without a fee. Fees today are about 100 sat/b, a multiple of that in times of congestion and lower in the weekends. You never have to pay 1000 sat/b, but you are of course free to subsidize miners however you want. This is roughly the same the fees were in 2013, only that those satoshis of yours are worth so much more USD now. That isn't the whole truth, and those spikes in fees come more often now and spike higher, but the minimum fee to get into a block averaged over a year isn't that much worse now than in 2013. That probably isn't very helpful if you need to transact in times of congestion, or make low value transactions, but it's important to know that netiher 1 nor 1000 sat/b has been reality for some time now, and that you should never talk about fees in USD because that doesn't describe how it works. Another common mistake is to include the value of the transaction when describing fees which misleads people into thinking fees are a percentage of the value transacted which is not the case.
toomim 9y ago
The cost is increasing because more people are trying to use Bitcoin, but it has an artificial limit to the number of people who can use it per second. Thus, with increasing demand, and static supply, the fees rise roughly quadratically over time. To reduce the fees, we need to remove that artificial 1mb limit. Here's the main approach to that right now: https://www.bitcoin.com/info/what-is-bitcoin-cash https://www.bitcoin.com/info/what-is-bitcoin-cash
- icelancer 9y ago
  >To reduce the fees, we need to remove that artificial 1mb limit. Here's the main approach to that right now... Removed the BCH spam link. No, this is NOT the main approach to that. The main approach to that is the Lightning Network, which is not yet in production. Your "main approach" is a hardfork that increases the block size, run by someone who owns the bitcoin.com domain, regularly misrepresents what Bitcoin Cash (bcash) actually is, and goes on live shows yelling obscenities and flashing the middle finger very professionally when these things are pointed out. So, no, Bcash is not the main approach to "fixing" Bitcoin. It is a wholly separate coin with trading volume less than one-third of Bitcoin.
  - relyio 9y ago
    Increasing block size is the low hanging fruit for reducing tx fees. It's a dead-simple idea. You increase the supply side of the fee market and users don't have to compete for transaction finality anymore. It has been implemented and we know it works. Of course, that is only kicking the can down the road and has many caveats. It still has proven effective to complete its goal (minimize tx fees). Lightning networks is a WIP that is months, perhaps years, away from hitting production. As such, I wouldn't call them the "main approach" to scaling except in the mind of core engineers. It might drive tx costs down, it might not, at this stage it is too early to tell for sure. As such, I think OP is right. It is completely fair to say that block size increase is the "main" approach, as in the "the one that we know for sure works right now", to making Bitcoin usable as a payment system. Now on a side note: I don't think you needed to be that aggressive with OP. I won't address the attacks on Roger Ver because it is my belief that attempts at turning a technical debate into politics should be met with contempt.
fixedfees 9y ago
Peercoin has fixed transactions fees, for comparison https://github.com/linalouise9/peercoin-marketing/blob/master/bitcoinvspeercoin/english.txt https://github.com/linalouise9/peercoin-marketing/blob/maste...

fizixer 9y ago

Not all of it goes to miners, unless it's a send/receive between individuals. If you want to do any trade with the currency, you have to put it on an exchange, and everytime you put it on (deposit) or take it off (withdraw) the exchange, fees are charged (vary from exchange to exchange, and from currency to currency).

AgentME 9y ago
Yeah but those aren't bitcoin transaction fees, those are just the fees for using a service that the service decides to charge. And you only need to deal with an exchange to exchange different types of currencies for each other. If you just want to pay someone with bitcoin, you already have bitcoin, and the recipient just wants bitcoin, then you don't need to involve an exchange.