13 ms·

Not really...the fees for Bitcoin, Ethereum and other L2 options are flat fees and are well under Visa/MC fees most of the time. Might want to look at Western

Not really...the fees for Bitcoin, Ethereum and other L2 options are flat fees and are well under Visa/MC fees most of the time. Might want to look at Western Union and the like too...way way under those fees. Current transaction fee (for 1 cent or a billion dollars) Bitcoin - $1.62 per transaction Ethereum - $3.50 per transaction Ethereum L2 - as low as 12 cents https://l2fees.info/ https://l2fees.info/ Here are credit card fees by comparison (lowest fees assuming you have high volume): Visa 1.29% + $0.05 Mastercard 1.29% + $0.05 Discover 1.48% + $0.05 American Express 1.58% + $0.10 https://www.fool.com/the-ascent/research/average-credit-card-processing-fees-costs-america/ https://www.fool.com/the-ascent/research/average-credit-card...

notahacker 4y ago
My fee for sending money to another UK bank account with instant settlement is $0.00 (or £0.00) Tell me more about the wonders of paying $1.62 plus currency conversion fees plus speculative asset volatility risk to send money to their bank account with eventually consistent settlement...
pavlov 4y ago
Well, L2 systems aren't on a blockchain at all, so do they even count? If we get to cherry-pick from whatever money transfer systems exist, it's worth remembering that bank transfers within the Eurozone area are free and practically immediate. What crypto can beat that? Clearly you don't need cryptocurrency to deliver a service that's ideal for consumers, as regulation has achieved it in Europe.
- hericium 4y ago
  > it's worth remembering that bank transfers within the Eurozone area are free and practically immediate In theory. Many banks are not using this system and stayed on old SEPA wire transfers: charges split between sender and receiver or covered by sender, 3 work days to process, ability to pay more to speed-up the process by two days etc. It's slow and/or costly.
- sumy23 4y ago
  I think the right way to look at a block chain is to think about it as a global computer that enables trusted execution on untrusted hardware. At present, this global computer is very weak. Cryptocurrencies are a good first program to implement on this computer because each transaction is essentially just adding and subtracting a few numbers. So yes, in some sense, it's crazy that the cost of adding and subtracting a few numbers costs $20. However, even though these global computers are currently very weak computationally, the new computational model allows for new things to be built. For instance, smart contracts. Using smart contracts and cryptocurrencies, you could easily implement almost every facet of the global financial system. From bank accounts, to money transfers, to bonds, to securities, brokerage services, margin services, options, credit default swaps, etc. Yes, many of these things can be implemented some other way, but blockchains allow anyone with a computer to build something along these lines. And yes, it's nice that the Eurozone regulated free money transfers. But how much work went into building the Eurozone and passing the required regulations? What if you want to write your own options contract? How long would it take to get regulation passed in the EU to allow free options contracts? Blockchains allow you to build a system akin to the entire EU banking infrastructure from your laptop. Even if it's not quite as good as the current system, I think it's still a cool idea.
  - Nursie 4y ago
    > Yes, many of these things can be implemented some other way, but blockchains allow anyone with a computer to build something along these lines. Any fraudster that wants to! There are more reasons than technical why such things are limited.
- criddell 4y ago
  I don't understand why L2 systems are even necessary. There's a relatively well known email exchange between Nakamoto and Mike Hearn in which Nakamoto says: > The existing Visa credit card network processes about 15 million Internet purchases per day worldwide. Bitcoin can already scale much larger than that with existing hardware for a fraction of the cost. If the original design of Bitcoin anticipated Visa-scale transactions for a fraction of the cost, what's the motivation for a L2? I'm assuming Nakamoto wasn't being cheeky when he wrote fraction of the cost. Afterall, 1000/1 is a fraction...
  - pavlov 4y ago
    Or maybe Nakamoto was simply full of crap, like people talking up their cryptocurrency schemes tend to be?
    - toolz 4y ago
      I just don't understand why crypto discussions seems to draw out so many rude comments. If satoshi wanted fame and fortune he could have both easily, but there are a ton of early bitcoins that haven't moved - so obviously he wasn't in it for the money or he would've used those coins.
      - shkkmo 4y ago
        Or they lost the key to the wallet before the tokens were worth cashing out.
        toolz 4y ago
        this is evidence that he wasn't in it for the money. If you came up with an elaborate scam with intentions of hustling people - how likely are you to be wildly successful, but accidentally lose access to the funds you worked so hard for?
        shkkmo 4y ago
        This seems like a post hoc rationalization to support a narrative. Key management is hard and just because people mess it up, it doesn't meam that they weren't serious about using that key. Designing and building novel software is a different skill set than keeping your stuff organized enough to not lose things. I could just as easily come up with a post hoc story that says that the reason that he has never come forward to claim credit is out of extreme embarrassment about the size of the fortune he lost, and that this is evidence that he does care about the money.
- DennisP 4y ago
  > L2 systems aren't on a blockchain at all The leading L2s on Ethereum are rollups, which store all transactions on chain in compressed form.
- randomran01234 4y ago
  ZK Rollups are definitely “on a blockchain” and exist as any other smart contract application, like USDC. What they move off-chain is the computation and data storage of a transaction, but verified zk proofs result in the same security guarantees as any other contract on the underlying L1.
- forum_ghost 4y ago
  Bitcoin solves the problem of frozen fx reserves and seized assets. It's a neutral store of value. the TAM is 400+ trillion. Payments are low margin, low value business. Often even subsidized by the systemic banks. Do you really think it costs zero to secure the entire GDP, and the entire wealth, of an entire economy? zero cost SEPA transactions don't secure the EU economy. The US military and their nuclear weapons do, and they don't cost zero, like a SEPA transactions for a coffee. What's the cost to secure 10 trillion? 100 trillion?
  - lottin 4y ago
    A virtual token is literally useless. It's only worth something, so far as it can be traded for actual goods, so the availability of "secured" goods is quite essential as far as the value of cryptographic tokens go.
    - forum_ghost 4y ago
      > availability of "secured" goods What do you mean by that? Backing?
      - lottin 4y ago
        By that I mean not easy to steal by anyone at gunpoint. The point is that money is not wealth. Wealth is the ability to consume goods and services. If you got stranded on a deserted island with a suitcase full of millions you'd still live in extreme poverty despite all your millions. Therefore securing crypto-currencies doesn't replace the need for securing actual wealth. On the contrary, it's an extra cost that its users have to bear, in addition to the costs of securing GDP and the entire economy.
        forum_ghost 4y ago
        Note that should you be rescued the suit case full of millions will still worth millions. The suitcase, stuffed with medium of exchange, holds value across time. This is the key concept to understand the issue at hand. For a medium of exchange to become useful, it must first become able to hold value, preferably long term, months/years. The only way an asset can do that, if there is demand to hold the asset for long durations, committed long term investors. Bitcoin is an experiment in bootstrapping a neutral money system from scratch. If you look at bitcoins money velocity, it’s much closer to M2, than M1. Thus comparing it to investment assets, or bonds, is much more relevant today than to payment systems. It’s a store of value for now, maybe a little speculative, sure. Once it grows large enough and value becomes more stable, it can become a decent medium of exchange then. This implies market capitalisation in many trillions, and if it proves to be successful: displacement of many other store of value. Negative yield bonds, gold. Maybe even real estate and rental yields on that are actually negative in real terms in many markets. We will see. As such it would represents a cloud economy of sorts with large amounts of wealth stored in it, trillions of dollars. That would require a correspondingly sizeable security budget to protect.
matkoniecz 4y ago
From article itself: > That’s why it recently cost $22 (!) to send a single token transaction on Ethereum So Ethereum has prices ranging from 3.5$ to 22$? Great. And vast, vast majority of my transactions would be costlier on Ethereum. I am rarely paying over 267$ in one transaction. 22$ per transactions would result in typical grocery shopping doubling in price. 3.5$ would be noticeable. Also, in bank transfers that I use I am simply not paying anything at all (within European Union). > well under Visa/MC fees most of the time That is simply untrue, and depends on how much you transfer.
- _6hmp 4y ago
  A small bit of nuance that could explain why the range could be $3.5 to $22 on a given day would be that they could be referring to different token types. The native token of ethereum (Ether) costs a fixed, smaller number of units of computation to send, whereas custom tokens (erc-20) have to do some additional bootstrapping work during transactions and cost more to send. So there's the units of computation used x "gas price". But yes, the "gas price" that serves to price congestion on the network is wildly variable due to congestion and low throughput. And that limited throughput is currently a real practical problem as you've pointed out in that the fees are too high. The answer will likely be in L2s as other people are pointing out. I think one interesting side effect of this ecosystem is it is actually driving new research and application for cryptography (including substantial funding): for example practical uses of zero knowledge proofs.
  - j_walter 4y ago
    Exactly this...it's not apples to apples comparison. Transferring an NFT is a larger transaction size so the cost is higher (hence the $22 price they are referring). The cost of the transaction is also based on how busy the blockchain is...like a way to discourage transactions if it's really busy. Like if you had a gas station that the price of gas (or actually more like a fee to use the gas pump) fluctuated based on how long the lines were.
- randomran01234 4y ago
  This same article mentions L2s which aim to bring these fees down to reasonable levels. L2 like zkSync and Optimism are already very cheap and can likely continue to get cheaper. https://l2fees.info/ https://l2fees.info/
falcolas 4y ago
I can count the number of >$100 credit card transactions I’ve made in the last month on one hand with fingers to spare. And for those transactions using cash, let alone BitCoin, would not have eliminated those transaction costs.
s1k3s 4y ago
Off topic but I’m really curious, why are these taxes a percentage? What justifies paying $0.1 for every $10 transfer, but $1 for $100? Is it more complicated to move $100 than it is to move $10? In the end it’s still a single transaction, right?
- matkoniecz 4y ago
  Form of price discrimination? Charging the same price for 1$ and 1000$ transaction would either make 1$ transaction not viable (BTC/ETH is doing this) or would be overall less profitable. https://en.wikipedia.org/wiki/Price_discrimination https://en.wikipedia.org/wiki/Price_discrimination Also, insuring against fraud is actually more expensive for more expensive transactions. And CC provide some minimal service here.
  - s1k3s 4y ago
    I was not aware of that concept, thanks!
    - matkoniecz 4y ago
      You may enjoy https://www.joelonsoftware.com/2004/12/15/camels-and-rubber-duckies/ https://www.joelonsoftware.com/2004/12/15/camels-and-rubber-... and https://www.joelonsoftware.com/2002/06/12/strategy-letter-v/ https://www.joelonsoftware.com/2002/06/12/strategy-letter-v/ - about this kind of economic strategies/effects explaining few hings which seem mysterious otherwise
kkielhofner 4y ago
Credit card fees include reward systems (points), zero liability fraud protection, extended warranties, car rental protection, dispute resolution/chargeback systems, customer service, support for tens of thousands of transactions per second, airline lounge access, priority entertainment tickets, airline miles - the list goes on and on. Whether you need any of these is debatable of course but it’s extremely disingenuous to consider it an apples to apples comparison seeing as blockchain provides literally none of these things. For large transfers (a billion dollars) the banking transfer fee is likely zero. I don’t pay for wires with no limit and my status/relationship with banks is nowhere near where it would be for a billion dollar transfer. Oh and wire transfers provide quite a bit of protection too. I recently had an international wire transfer where the recipient provided the wrong account number. For $10 the funds were returned. With blockchain they would’ve gone up in smoke and lost forever. People make mistakes. Payment information gets compromised. Fraud happens. As long as blockchain is based on ignoring these fundamental truths it will never achieve any meaningful adoption.
- j_walter 4y ago
  You don't pay for the fees...the vendor does. Not to mention all of the other fees they rake in. You can have other ways of making sure payments are safeguarded...actually one of the smartest ways to do this was setup on the dark web illegal markets where there was a middle man that didn't have custody of the money (at least in the best multisig ones) but was able to complete or reverse transactions if needed. Basically an escrow account... https://darknetone.com/understanding-multisig-vs-escrow-vs-finalize-early-on-darknet-markets/ https://darknetone.com/understanding-multisig-vs-escrow-vs-f...
  - kkielhofner 4y ago
    We all pay for the fees but IMO it's more than worth it considering all of the things I mentioned and more. The other fees they rake in (I'm assuming you mean interest) are from issuing unsecured loans. That's another topic entirely. Escrow is many thousands of years old and certainly exists in many forms in the financial system today. It's just that because of all of the other things I mentioned the average person uses it maybe a few times in their lives for very large and complicated transactions. The suggestion to use escrow or some other kind of really convoluted system for extremely small payments when I can swipe a card anywhere in the world with all of the benefits mentioned above and more for relatively tiny fees is frankly ridiculous. Of course it makes sense for marketplaces where every single actor in the marketplace is breaking the law in the first place. I've been involved in crypto since 2017 and I'm STILL waiting for a reasonable use case or application where it results in a net benefit for the average person.
simias 4y ago
L2 is pushing the problem a bit further away, but it's not a long term solution. All L2 solutions in existence are fundamentally centralizing (it doesn't have to be, but it's a lot harder and since most cryptocurrency speculators don't actually care about centralization it's much easier to do it that way, and L2 solutions are already super complicated anyway) and they only offer a maximum theoretical transaction count improvement of about 500x in a very optimistic case[1]. Except 500x is not nearly enough. It may be enough to temporarily drop the fees but it a post-blockchain world where everybody does dozens of blockchain transactions a day, be it to play a game or buy a coffee or ride the subway, it's not ever close to being sufficient. Your scaling factor needs to be millions of times better. So what's the solution? Even more complexity on top of this ridiculous Rube Goldberg machine? All that to emulate solutions that already exist and already work well and vastly more efficiently? Why? [1] https://vitalik.ca/general/2021/01/05/rollup.html https://vitalik.ca/general/2021/01/05/rollup.html
- DennisP 4y ago
  A while back I googled the number of transactions per second for the various types of payments in the US, and it came to less than 100K tx/sec, including credit, debit, cash, checks, wires, and ACH. Rollups on Ethereum today can handle a couple thousand tx/sec, and the sharding system they have planned will boost that by about a factor of 200. These systems are somewhat centralized for block production but fully decentralized for verification. Having had to spend time more than once physically visiting bank branches to send wires, or wait for days to get checks to clear from one bank to another, I'm not convinced that today's solutions are all that impressive. They don't exactly seem simple, either.
greyface- 4y ago
> Current transaction fee (for 1 cent or a billion dollars) > Bitcoin - $1.62 per transaction This is misleading. A best-effort transaction can be submitted with a fee of 1 sat/vB. For a 374 vB transaction (a typical 2-in-2-out P2PKH -- see https://bitcoinops.org/en/tools/calc-size/ https://bitcoinops.org/en/tools/calc-size/), this is 11 cents. $1.62 is either an enormous transaction, or one submitted at very high priority.
- landemva 4y ago
  Wallet fee estimates have often been way too high for some time. People keep overpaying.
petmon 4y ago
The cost of a bitcoin transaction is not adequately captured by transaction fees. There's two alternative ways to look at it: 1. Divide miner revenue (fees + seignorage) by the number of transactions, yielding the total amount that miners extract. It was $34m today, with ~261k transactions, yielding a cost per transaction of $130. [1] 2. Estimate energy cost at 1,173 kWh per transaction [2]. If you assume cheap electricity at say $.09/kWh you get a cost of $105 per transaction in electricity alone, which ignores hardware capital costs, etc. Either way the cost is over $100 per transaction, and would be reflected in a falling value of BTC. But it may be masked if there's an influx of new money into the system. 1: https://ycharts.com/indicators/bitcoin_miners_revenue_per_day https://ycharts.com/indicators/bitcoin_miners_revenue_per_da... 2: https://fortune.com/2021/10/26/bitcoin-electricity-consumption-carbon-footprin/ https://fortune.com/2021/10/26/bitcoin-electricity-consumpti...
- danuker 4y ago
  I agree, and I think this is the largest problem in BTC. If the creators had predicted its explosive growth, they would have chosen a faster rate of reward halving, more quickly bringing the transaction fees in line with the externalities. Perhaps someone could create a "Bitcoin Green" fork which would simply speed up the reward halving to once a year instead of once every 4 years, since by now, everyone has heard of Bitcoin, and only large specialized operations can mine it profitably (thus the reason for its inflation has disappeared).
- dmichulke 4y ago
  Re 1: Shouldn't we then also add the increase in the monetary base to the cost of a dollar transaction? 3.4 trillions in Jan 2020 -> 5.8 trillions now https://fred.stlouisfed.org/series/BOGMBASE https://fred.stlouisfed.org/series/BOGMBASE
lottin 4y ago
In crypto, transaction fees don't reflect actual transaction costs, because transaction processors are being paid with newly minted coins in addition to the fees, so it's not really an accurate comparison.
Melting_Harps 4y ago
> Bitcoin - $1.62 per transaction If you used real sources I'd take this thread seriously, but you don't and this is exactly why I don't respect the majority HN's view on most things with regards to Bitcoin and to a lesser degree crypto in general. It's currently $0.04 for a high priority tx on the mainchain [0] right now as the memool is pretty clear. [0]: https://mempool.space/ https://mempool.space/

notahacker 4y ago

My fee for sending money to another UK bank account with instant settlement is $0.00 (or £0.00) Tell me more about the wonders of paying $1.62 plus currency conversion fees plus speculative asset volatility risk to send money to their bank account with eventually consistent settlement...

pavlov 4y ago

Well, L2 systems aren't on a blockchain at all, so do they even count? If we get to cherry-pick from whatever money transfer systems exist, it's worth remembering that bank transfers within the Eurozone area are free and practically immediate. What crypto can beat that? Clearly you don't need cryptocurrency to deliver a service that's ideal for consumers, as regulation has achieved it in Europe.

hericium 4y ago
> it's worth remembering that bank transfers within the Eurozone area are free and practically immediate In theory. Many banks are not using this system and stayed on old SEPA wire transfers: charges split between sender and receiver or covered by sender, 3 work days to process, ability to pay more to speed-up the process by two days etc. It's slow and/or costly.
sumy23 4y ago
I think the right way to look at a block chain is to think about it as a global computer that enables trusted execution on untrusted hardware. At present, this global computer is very weak. Cryptocurrencies are a good first program to implement on this computer because each transaction is essentially just adding and subtracting a few numbers. So yes, in some sense, it's crazy that the cost of adding and subtracting a few numbers costs $20. However, even though these global computers are currently very weak computationally, the new computational model allows for new things to be built. For instance, smart contracts. Using smart contracts and cryptocurrencies, you could easily implement almost every facet of the global financial system. From bank accounts, to money transfers, to bonds, to securities, brokerage services, margin services, options, credit default swaps, etc. Yes, many of these things can be implemented some other way, but blockchains allow anyone with a computer to build something along these lines. And yes, it's nice that the Eurozone regulated free money transfers. But how much work went into building the Eurozone and passing the required regulations? What if you want to write your own options contract? How long would it take to get regulation passed in the EU to allow free options contracts? Blockchains allow you to build a system akin to the entire EU banking infrastructure from your laptop. Even if it's not quite as good as the current system, I think it's still a cool idea.
- Nursie 4y ago
  > Yes, many of these things can be implemented some other way, but blockchains allow anyone with a computer to build something along these lines. Any fraudster that wants to! There are more reasons than technical why such things are limited.
criddell 4y ago
I don't understand why L2 systems are even necessary. There's a relatively well known email exchange between Nakamoto and Mike Hearn in which Nakamoto says: > The existing Visa credit card network processes about 15 million Internet purchases per day worldwide. Bitcoin can already scale much larger than that with existing hardware for a fraction of the cost. If the original design of Bitcoin anticipated Visa-scale transactions for a fraction of the cost, what's the motivation for a L2? I'm assuming Nakamoto wasn't being cheeky when he wrote fraction of the cost. Afterall, 1000/1 is a fraction...
- pavlov 4y ago
  Or maybe Nakamoto was simply full of crap, like people talking up their cryptocurrency schemes tend to be?
  - toolz 4y ago
    I just don't understand why crypto discussions seems to draw out so many rude comments. If satoshi wanted fame and fortune he could have both easily, but there are a ton of early bitcoins that haven't moved - so obviously he wasn't in it for the money or he would've used those coins.
    - shkkmo 4y ago
      Or they lost the key to the wallet before the tokens were worth cashing out.
      - toolz 4y ago
        this is evidence that he wasn't in it for the money. If you came up with an elaborate scam with intentions of hustling people - how likely are you to be wildly successful, but accidentally lose access to the funds you worked so hard for?
        shkkmo 4y ago
        This seems like a post hoc rationalization to support a narrative. Key management is hard and just because people mess it up, it doesn't meam that they weren't serious about using that key. Designing and building novel software is a different skill set than keeping your stuff organized enough to not lose things. I could just as easily come up with a post hoc story that says that the reason that he has never come forward to claim credit is out of extreme embarrassment about the size of the fortune he lost, and that this is evidence that he does care about the money.
DennisP 4y ago
> L2 systems aren't on a blockchain at all The leading L2s on Ethereum are rollups, which store all transactions on chain in compressed form.
randomran01234 4y ago
ZK Rollups are definitely “on a blockchain” and exist as any other smart contract application, like USDC. What they move off-chain is the computation and data storage of a transaction, but verified zk proofs result in the same security guarantees as any other contract on the underlying L1.
forum_ghost 4y ago
Bitcoin solves the problem of frozen fx reserves and seized assets. It's a neutral store of value. the TAM is 400+ trillion. Payments are low margin, low value business. Often even subsidized by the systemic banks. Do you really think it costs zero to secure the entire GDP, and the entire wealth, of an entire economy? zero cost SEPA transactions don't secure the EU economy. The US military and their nuclear weapons do, and they don't cost zero, like a SEPA transactions for a coffee. What's the cost to secure 10 trillion? 100 trillion?
- lottin 4y ago
  A virtual token is literally useless. It's only worth something, so far as it can be traded for actual goods, so the availability of "secured" goods is quite essential as far as the value of cryptographic tokens go.
  - forum_ghost 4y ago
    > availability of "secured" goods What do you mean by that? Backing?
    - lottin 4y ago
      By that I mean not easy to steal by anyone at gunpoint. The point is that money is not wealth. Wealth is the ability to consume goods and services. If you got stranded on a deserted island with a suitcase full of millions you'd still live in extreme poverty despite all your millions. Therefore securing crypto-currencies doesn't replace the need for securing actual wealth. On the contrary, it's an extra cost that its users have to bear, in addition to the costs of securing GDP and the entire economy.
      - forum_ghost 4y ago
        Note that should you be rescued the suit case full of millions will still worth millions. The suitcase, stuffed with medium of exchange, holds value across time. This is the key concept to understand the issue at hand. For a medium of exchange to become useful, it must first become able to hold value, preferably long term, months/years. The only way an asset can do that, if there is demand to hold the asset for long durations, committed long term investors. Bitcoin is an experiment in bootstrapping a neutral money system from scratch. If you look at bitcoins money velocity, it’s much closer to M2, than M1. Thus comparing it to investment assets, or bonds, is much more relevant today than to payment systems. It’s a store of value for now, maybe a little speculative, sure. Once it grows large enough and value becomes more stable, it can become a decent medium of exchange then. This implies market capitalisation in many trillions, and if it proves to be successful: displacement of many other store of value. Negative yield bonds, gold. Maybe even real estate and rental yields on that are actually negative in real terms in many markets. We will see. As such it would represents a cloud economy of sorts with large amounts of wealth stored in it, trillions of dollars. That would require a correspondingly sizeable security budget to protect.

matkoniecz 4y ago

From article itself: > That’s why it recently cost $22 (!) to send a single token transaction on Ethereum So Ethereum has prices ranging from 3.5$ to 22$? Great. And vast, vast majority of my transactions would be costlier on Ethereum. I am rarely paying over 267$ in one transaction. 22$ per transactions would result in typical grocery shopping doubling in price. 3.5$ would be noticeable. Also, in bank transfers that I use I am simply not paying anything at all (within European Union). > well under Visa/MC fees most of the time That is simply untrue, and depends on how much you transfer.

_6hmp 4y ago
A small bit of nuance that could explain why the range could be $3.5 to $22 on a given day would be that they could be referring to different token types. The native token of ethereum (Ether) costs a fixed, smaller number of units of computation to send, whereas custom tokens (erc-20) have to do some additional bootstrapping work during transactions and cost more to send. So there's the units of computation used x "gas price". But yes, the "gas price" that serves to price congestion on the network is wildly variable due to congestion and low throughput. And that limited throughput is currently a real practical problem as you've pointed out in that the fees are too high. The answer will likely be in L2s as other people are pointing out. I think one interesting side effect of this ecosystem is it is actually driving new research and application for cryptography (including substantial funding): for example practical uses of zero knowledge proofs.
- j_walter 4y ago
  Exactly this...it's not apples to apples comparison. Transferring an NFT is a larger transaction size so the cost is higher (hence the $22 price they are referring). The cost of the transaction is also based on how busy the blockchain is...like a way to discourage transactions if it's really busy. Like if you had a gas station that the price of gas (or actually more like a fee to use the gas pump) fluctuated based on how long the lines were.
randomran01234 4y ago
This same article mentions L2s which aim to bring these fees down to reasonable levels. L2 like zkSync and Optimism are already very cheap and can likely continue to get cheaper. https://l2fees.info/ https://l2fees.info/

falcolas 4y ago

I can count the number of >$100 credit card transactions I’ve made in the last month on one hand with fingers to spare. And for those transactions using cash, let alone BitCoin, would not have eliminated those transaction costs.

s1k3s 4y ago

Off topic but I’m really curious, why are these taxes a percentage? What justifies paying $0.1 for every $10 transfer, but $1 for $100? Is it more complicated to move $100 than it is to move $10? In the end it’s still a single transaction, right?

matkoniecz 4y ago
Form of price discrimination? Charging the same price for 1$ and 1000$ transaction would either make 1$ transaction not viable (BTC/ETH is doing this) or would be overall less profitable. https://en.wikipedia.org/wiki/Price_discrimination https://en.wikipedia.org/wiki/Price_discrimination Also, insuring against fraud is actually more expensive for more expensive transactions. And CC provide some minimal service here.
- s1k3s 4y ago
  I was not aware of that concept, thanks!
  - matkoniecz 4y ago
    You may enjoy https://www.joelonsoftware.com/2004/12/15/camels-and-rubber-duckies/ https://www.joelonsoftware.com/2004/12/15/camels-and-rubber-... and https://www.joelonsoftware.com/2002/06/12/strategy-letter-v/ https://www.joelonsoftware.com/2002/06/12/strategy-letter-v/ - about this kind of economic strategies/effects explaining few hings which seem mysterious otherwise

kkielhofner 4y ago

Credit card fees include reward systems (points), zero liability fraud protection, extended warranties, car rental protection, dispute resolution/chargeback systems, customer service, support for tens of thousands of transactions per second, airline lounge access, priority entertainment tickets, airline miles - the list goes on and on. Whether you need any of these is debatable of course but it’s extremely disingenuous to consider it an apples to apples comparison seeing as blockchain provides literally none of these things. For large transfers (a billion dollars) the banking transfer fee is likely zero. I don’t pay for wires with no limit and my status/relationship with banks is nowhere near where it would be for a billion dollar transfer. Oh and wire transfers provide quite a bit of protection too. I recently had an international wire transfer where the recipient provided the wrong account number. For $10 the funds were returned. With blockchain they would’ve gone up in smoke and lost forever. People make mistakes. Payment information gets compromised. Fraud happens. As long as blockchain is based on ignoring these fundamental truths it will never achieve any meaningful adoption.

j_walter 4y ago
You don't pay for the fees...the vendor does. Not to mention all of the other fees they rake in. You can have other ways of making sure payments are safeguarded...actually one of the smartest ways to do this was setup on the dark web illegal markets where there was a middle man that didn't have custody of the money (at least in the best multisig ones) but was able to complete or reverse transactions if needed. Basically an escrow account... https://darknetone.com/understanding-multisig-vs-escrow-vs-finalize-early-on-darknet-markets/ https://darknetone.com/understanding-multisig-vs-escrow-vs-f...
- kkielhofner 4y ago
  We all pay for the fees but IMO it's more than worth it considering all of the things I mentioned and more. The other fees they rake in (I'm assuming you mean interest) are from issuing unsecured loans. That's another topic entirely. Escrow is many thousands of years old and certainly exists in many forms in the financial system today. It's just that because of all of the other things I mentioned the average person uses it maybe a few times in their lives for very large and complicated transactions. The suggestion to use escrow or some other kind of really convoluted system for extremely small payments when I can swipe a card anywhere in the world with all of the benefits mentioned above and more for relatively tiny fees is frankly ridiculous. Of course it makes sense for marketplaces where every single actor in the marketplace is breaking the law in the first place. I've been involved in crypto since 2017 and I'm STILL waiting for a reasonable use case or application where it results in a net benefit for the average person.

simias 4y ago

L2 is pushing the problem a bit further away, but it's not a long term solution. All L2 solutions in existence are fundamentally centralizing (it doesn't have to be, but it's a lot harder and since most cryptocurrency speculators don't actually care about centralization it's much easier to do it that way, and L2 solutions are already super complicated anyway) and they only offer a maximum theoretical transaction count improvement of about 500x in a very optimistic case[1]. Except 500x is not nearly enough. It may be enough to temporarily drop the fees but it a post-blockchain world where everybody does dozens of blockchain transactions a day, be it to play a game or buy a coffee or ride the subway, it's not ever close to being sufficient. Your scaling factor needs to be millions of times better. So what's the solution? Even more complexity on top of this ridiculous Rube Goldberg machine? All that to emulate solutions that already exist and already work well and vastly more efficiently? Why? [1] https://vitalik.ca/general/2021/01/05/rollup.html https://vitalik.ca/general/2021/01/05/rollup.html

DennisP 4y ago
A while back I googled the number of transactions per second for the various types of payments in the US, and it came to less than 100K tx/sec, including credit, debit, cash, checks, wires, and ACH. Rollups on Ethereum today can handle a couple thousand tx/sec, and the sharding system they have planned will boost that by about a factor of 200. These systems are somewhat centralized for block production but fully decentralized for verification. Having had to spend time more than once physically visiting bank branches to send wires, or wait for days to get checks to clear from one bank to another, I'm not convinced that today's solutions are all that impressive. They don't exactly seem simple, either.

greyface- 4y ago

> Current transaction fee (for 1 cent or a billion dollars) > Bitcoin - $1.62 per transaction This is misleading. A best-effort transaction can be submitted with a fee of 1 sat/vB. For a 374 vB transaction (a typical 2-in-2-out P2PKH -- see https://bitcoinops.org/en/tools/calc-size/ https://bitcoinops.org/en/tools/calc-size/), this is 11 cents. $1.62 is either an enormous transaction, or one submitted at very high priority.

landemva 4y ago
Wallet fee estimates have often been way too high for some time. People keep overpaying.

petmon 4y ago

The cost of a bitcoin transaction is not adequately captured by transaction fees. There's two alternative ways to look at it: 1. Divide miner revenue (fees + seignorage) by the number of transactions, yielding the total amount that miners extract. It was $34m today, with ~261k transactions, yielding a cost per transaction of $130. [1] 2. Estimate energy cost at 1,173 kWh per transaction [2]. If you assume cheap electricity at say $.09/kWh you get a cost of $105 per transaction in electricity alone, which ignores hardware capital costs, etc. Either way the cost is over $100 per transaction, and would be reflected in a falling value of BTC. But it may be masked if there's an influx of new money into the system. 1: https://ycharts.com/indicators/bitcoin_miners_revenue_per_day https://ycharts.com/indicators/bitcoin_miners_revenue_per_da... 2: https://fortune.com/2021/10/26/bitcoin-electricity-consumption-carbon-footprin/ https://fortune.com/2021/10/26/bitcoin-electricity-consumpti...

danuker 4y ago
I agree, and I think this is the largest problem in BTC. If the creators had predicted its explosive growth, they would have chosen a faster rate of reward halving, more quickly bringing the transaction fees in line with the externalities. Perhaps someone could create a "Bitcoin Green" fork which would simply speed up the reward halving to once a year instead of once every 4 years, since by now, everyone has heard of Bitcoin, and only large specialized operations can mine it profitably (thus the reason for its inflation has disappeared).
dmichulke 4y ago
Re 1: Shouldn't we then also add the increase in the monetary base to the cost of a dollar transaction? 3.4 trillions in Jan 2020 -> 5.8 trillions now https://fred.stlouisfed.org/series/BOGMBASE https://fred.stlouisfed.org/series/BOGMBASE

lottin 4y ago

In crypto, transaction fees don't reflect actual transaction costs, because transaction processors are being paid with newly minted coins in addition to the fees, so it's not really an accurate comparison.

Melting_Harps 4y ago

> Bitcoin - $1.62 per transaction If you used real sources I'd take this thread seriously, but you don't and this is exactly why I don't respect the majority HN's view on most things with regards to Bitcoin and to a lesser degree crypto in general. It's currently $0.04 for a high priority tx on the mainchain [0] right now as the memool is pretty clear. [0]: https://mempool.space/ https://mempool.space/