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The average bitcoin transaction cost was over $1.50 last month, and it can only handle a maximum of about 7 transactions a second. Why would bitcoin be good for

The average bitcoin transaction cost was over $1.50 last month, and it can only handle a maximum of about 7 transactions a second. Why would bitcoin be good for small transaction? https://ycharts.com/indicators/bitcoin_average_transaction_fee https://ycharts.com/indicators/bitcoin_average_transaction_f...

Retric 7y ago
The theory was bitcoin would have low overhead as the only limit was machine time which should be cheap. However, an artificial transaction limit was created which creates artificial scarcity and thus high transaction fees. In theory a miner wants to have the highest number of profitable transactions possible, but we ended up with collusion to drive up prices and thus miner proffits.
- sarakayakomzin 7y ago
  >However, an artificial transaction limit was created ? there's nothing artificial about a transaction limit. it is p2p and fault tolerant, and there's no such thing as unlimited data storage yet. this is by design.
- 3fe9a03ccd14ca5 7y ago
  I don’t think the 7 transactions per second is artificial. In fact, I think it’s the technical maximum. https://en.m.wikipedia.org/wiki/Bitcoin_scalability_problem https://en.m.wikipedia.org/wiki/Bitcoin_scalability_problem
  - fidelramos 7y ago
    1 MB was an arbitrary value chosen by Satoshi Nakamoto to fight off spam in 2010, in no way it's a technical limit on the Bitcoin network, it's completely artificial.
fidelramos 7y ago
The 7 transaction per second limit of BTC is completely artificial. It stems in the max size of blocks being capped to 1 MB. This was introduced by Satoshi Nakamoto way back in 2010 as an easy way to keep spam from flooding the blockchain. Keep in mind that back then Bitcoin was basically worthless, so one could spam the network with millions of transactions at very low costs, rendering it unusable to everybody. Satoshi introduced the 1 MB block size limit as a temporary measure meant to be easily lifted as transaction volume and Bitcoin price increased in the future [1]. However this didn't happen, Satoshi Nakamoto disappeared shortly after and his appointed successor, Gavin Andresen, was ousted from the project and his commit rights revoked in 2016. A lot of people tried to raise the blocksize, and all of them failed because the developers who took over Bitcoin Core have always refused. Given that consensus failed to raised the block size the Bitcoin ABC implementation split from BTC to create Bitcoin Cash (BCH) on August 1st, 2017. Bitcoin Cash initially supported blocks of up to 8 MB, which was later raised to 32 MB. Mainnet stress tests have proven that the network works fine with blocks of up to 20 MB, making clear that the 1 MB limit of BTC is as artificial as it sounds like. Because of the higher block size accommodating to more transactions the fees in BCH are consistently under 1 cent ($0.01), and the roadmap [2] includes features to keep fees low even as BCH price increases (fractional satoshis). I highly recommend this article [3] as the most comprehensive summary of the Bitcoin scaling debate. So the final question would be: is 32 MB blocks the best we can do? And the answer is a clear NO. There is much room for improvement and the limits are definitely much much higher. I recommend this talk by Amaury Séchet [4] and this article on Terabyte blocks by Johannes Vermorel [5] to learn more. [1] https://bitcointalk.org/index.php?topic=1347.msg15366#msg15366 https://bitcointalk.org/index.php?topic=1347.msg15366#msg153... [2] https://www.bitcoincash.org/roadmap.html https://www.bitcoincash.org/roadmap.html [3] https://medium.com/hackernoon/the-great-bitcoin-scaling-debate-a-timeline-6108081dbada https://medium.com/hackernoon/the-great-bitcoin-scaling-deba... [4] https://www.youtube.com/watch?v=Z0rplj8wSR4 https://www.youtube.com/watch?v=Z0rplj8wSR4 [5] http://blog.vermorel.com/journal/2017/12/17/terabyte-blocks-for-bitcoin-cash.html http://blog.vermorel.com/journal/2017/12/17/terabyte-blocks-...
- tromp 7y ago
  One of the main goals of bitcoin was to be decentralized by allowing most computers to download and verify the entire history of bitcoin transactions within reasonable space and time. With a 32MB limit, that would amount to many TB of data rather than the current 250GB, and many weeks of verification instead of a few days.

Retric 7y ago

The theory was bitcoin would have low overhead as the only limit was machine time which should be cheap. However, an artificial transaction limit was created which creates artificial scarcity and thus high transaction fees. In theory a miner wants to have the highest number of profitable transactions possible, but we ended up with collusion to drive up prices and thus miner proffits.

sarakayakomzin 7y ago
>However, an artificial transaction limit was created ? there's nothing artificial about a transaction limit. it is p2p and fault tolerant, and there's no such thing as unlimited data storage yet. this is by design.
3fe9a03ccd14ca5 7y ago
I don’t think the 7 transactions per second is artificial. In fact, I think it’s the technical maximum. https://en.m.wikipedia.org/wiki/Bitcoin_scalability_problem https://en.m.wikipedia.org/wiki/Bitcoin_scalability_problem
- fidelramos 7y ago
  1 MB was an arbitrary value chosen by Satoshi Nakamoto to fight off spam in 2010, in no way it's a technical limit on the Bitcoin network, it's completely artificial.

fidelramos 7y ago

The 7 transaction per second limit of BTC is completely artificial. It stems in the max size of blocks being capped to 1 MB. This was introduced by Satoshi Nakamoto way back in 2010 as an easy way to keep spam from flooding the blockchain. Keep in mind that back then Bitcoin was basically worthless, so one could spam the network with millions of transactions at very low costs, rendering it unusable to everybody. Satoshi introduced the 1 MB block size limit as a temporary measure meant to be easily lifted as transaction volume and Bitcoin price increased in the future [1]. However this didn't happen, Satoshi Nakamoto disappeared shortly after and his appointed successor, Gavin Andresen, was ousted from the project and his commit rights revoked in 2016. A lot of people tried to raise the blocksize, and all of them failed because the developers who took over Bitcoin Core have always refused. Given that consensus failed to raised the block size the Bitcoin ABC implementation split from BTC to create Bitcoin Cash (BCH) on August 1st, 2017. Bitcoin Cash initially supported blocks of up to 8 MB, which was later raised to 32 MB. Mainnet stress tests have proven that the network works fine with blocks of up to 20 MB, making clear that the 1 MB limit of BTC is as artificial as it sounds like. Because of the higher block size accommodating to more transactions the fees in BCH are consistently under 1 cent ($0.01), and the roadmap [2] includes features to keep fees low even as BCH price increases (fractional satoshis). I highly recommend this article [3] as the most comprehensive summary of the Bitcoin scaling debate. So the final question would be: is 32 MB blocks the best we can do? And the answer is a clear NO. There is much room for improvement and the limits are definitely much much higher. I recommend this talk by Amaury Séchet [4] and this article on Terabyte blocks by Johannes Vermorel [5] to learn more. [1] https://bitcointalk.org/index.php?topic=1347.msg15366#msg15366 https://bitcointalk.org/index.php?topic=1347.msg15366#msg153... [2] https://www.bitcoincash.org/roadmap.html https://www.bitcoincash.org/roadmap.html [3] https://medium.com/hackernoon/the-great-bitcoin-scaling-debate-a-timeline-6108081dbada https://medium.com/hackernoon/the-great-bitcoin-scaling-deba... [4] https://www.youtube.com/watch?v=Z0rplj8wSR4 https://www.youtube.com/watch?v=Z0rplj8wSR4 [5] http://blog.vermorel.com/journal/2017/12/17/terabyte-blocks-for-bitcoin-cash.html http://blog.vermorel.com/journal/2017/12/17/terabyte-blocks-...

tromp 7y ago
One of the main goals of bitcoin was to be decentralized by allowing most computers to download and verify the entire history of bitcoin transactions within reasonable space and time. With a 32MB limit, that would amount to many TB of data rather than the current 250GB, and many weeks of verification instead of a few days.