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Someone is creating tokens with the hope of selling them onwards. Most of them are created by a single entity, who spent about $30M in fees to do so, so presuma

Someone is creating tokens with the hope of selling them onwards. Most of them are created by a single entity, who spent about $30M in fees to do so, so presumably they expect people to buy them, and thus profit. The only reason most Bitcoin users care is that they pushed up fees for everyone else (there is limited block space, so miners take the highest bids). Such few pressure is expected to be the norm eventually, and has happened before, but there's been a prolonged period (years) of low fees so it was a bit of a surprise to many.

givemeethekeys 3y ago
Does that means that the cost of transferring bitcoin will only go up with time?
- tylersmith 3y ago
  The cost will rise and fall based on demand for block space. If that demand only goes up, then yes.
- scrum-treats 3y ago
  "We leave the conclusions to the reader. However, we notice that by spending only 0.005% of the total Bitcoin supply on transaction fees, a single entity can significantly impact the entire Blockchain regime. This illustrates that if a whale or a governmental actor, possessing hundreds of thousands of Bitcoins, decides to spam the blockchain, they could impede its usability for normal payments."
  - Paul-Craft 3y ago
    There are essentially no "normal payments" being done with Bitcoin.
    - iHeartVLC 3y ago
      [dead]
    - scrum-treats 3y ago
      Well, what is "normal" anyways... For me, the next question is: Who owns that BTC address? Once we know this, we can fairly quickly piece together the link between BTC manipulation and adjacent monetary paths, e.g., US stock market fluctuations and the recent bank failures.
    - LoganDark 3y ago
      I've paid for things with Bitcoin before. Unless by "essentially" you mean to say that those types of transactions don't make up a significant network volume.
- qindra 3y ago
  if you think about it in the long-term, the rewards eventually go to zero and there's no incentive for any of the miners to mine and the whole thing collapses
  - thatguy0900 3y ago
    I was under the impression that long term, the fees will increase and the fees will be the miners reward
    - paulgb 3y ago
      Unlike the block reward (mining subsidy) which is set according to a fixed schedule, fees are set by the market. They will go up if demand for L1 transactions go up, but there’s nothing in the protocol to push them up over time. Satoshi’s vision was for Bitcoin to be used as digital cash[1], so that transaction demand would be enough to sustain the security of the system. Since the “cash” use case has fallen away to the “store of value” use case, it seems a bit dubious. Transaction costs have recently gone up because of ordinals and NFTs so we’ll see if that sticks. [1] the Bitcoin paper was called “Bitcoin: a Peer-to-Peer Electronic Cash System”
      - faefox 3y ago
        Did the original "digital cash" thesis ever make sense? It's my understanding that Bitcoin can never hope to scale to meet a fraction of daily real-world transaction volume outside of adopting a so-called L2 solution like Lightning Network, which would seem to defeat the point somewhat.
        paulgb 3y ago
        It certainly couldn’t have covered all of human commerce, but it could cover the sort of transactions where having an uncensorable, irreversible transaction is worth paying a premium for (silk road, etc.)
      - RustyRussell 3y ago
- RustyRussell 3y ago
  Yes, Bitcoin is designed to migrate from the current inflation subsidy to fees paid by the users of the system. https://rusty-lightning.medium.com/the-three-economic-eras-of-bitcoin-d43bf0cf058a https://rusty-lightning.medium.com/the-three-economic-eras-o... for more detail that you probably want...
  - FabHK 3y ago
    Indeed, and then the cost of a single transaction (around USD 50 currently) will be borne by the sender/recipient, rather than by all Bitcoin holders via increase of the money supply (as is the case now). (Note that the actual cost is probably higher due to externalities in the waste of electricity and equipment, and borne by all of us.)
refulgentis 3y ago
Is this accurate? Theres some sort of side-storage mechanism in Bitcoin that you can essentially pay for, but its little trafficked. But its used for NFTs. And for whatever reason this entity bought a ton of "NFT UPCs", which has the side effect of driving up transaction costs because they're spammy transcitions on limited bandwidth.
mvdtnz 3y ago
> they pushed up fees for everyone else (there is limited block space, so miners take the highest bids) Imagine if your Visa card became hundreds of times more expensive to use during the Christmas shopping period.
- Paul-Craft 3y ago
  My Visa card doesn't cost me anything to use, because I don't carry a balance. It costs the merchant money to process the transaction, which would get passed on to consumers in general as higher prices. So, if this happened, what you'd see is people complaining about "inflation."
  - foogazi 3y ago
    >> Imagine if your Visa card became hundreds of times more expensive to use during the Christmas shopping period. > My Visa card doesn't cost me anything to use Gp said imagine
    - Paul-Craft 3y ago
      0 * 1000 = 0 Actually, my card costs me negative money to use. I get cash back with no annual fee.
      - ilyt 3y ago
        That's just costing other side of the transaction
      - lxgr 3y ago
        And who do you think pays for that cashback?
        deleted 3y ago
        [deleted]
  - cirrus3 3y ago
nullc 3y ago
> Most of them are created by a single entity, Those that aren't are probably created by other people intending to immediately sell them to a single entity: https://www.reddit.com/r/ethereum/comments/13e3di3/can_someone_explain_brc20_to_me_and_how_it/jjsse09/ https://www.reddit.com/r/ethereum/comments/13e3di3/can_someo...
RustyRussell 3y ago
Oops, too late to edit, but apparently this is a paid inscription service, not a single whale user: https://twitter.com/mononautical/status/1663383996561072129?s=20 https://twitter.com/mononautical/status/1663383996561072129?...
tromp 3y ago
> Such few pressure is expected to be the norm eventually Or rather, such fee pressure is required to be the norm eventually for bitcoin to remain secure when block subsidies become insignificant (halving every 4 years, 1024x less in 4 decades).

givemeethekeys 3y ago

Does that means that the cost of transferring bitcoin will only go up with time?

tylersmith 3y ago
The cost will rise and fall based on demand for block space. If that demand only goes up, then yes.
scrum-treats 3y ago
"We leave the conclusions to the reader. However, we notice that by spending only 0.005% of the total Bitcoin supply on transaction fees, a single entity can significantly impact the entire Blockchain regime. This illustrates that if a whale or a governmental actor, possessing hundreds of thousands of Bitcoins, decides to spam the blockchain, they could impede its usability for normal payments."
- Paul-Craft 3y ago
  There are essentially no "normal payments" being done with Bitcoin.
  - iHeartVLC 3y ago
    [dead]
  - scrum-treats 3y ago
    Well, what is "normal" anyways... For me, the next question is: Who owns that BTC address? Once we know this, we can fairly quickly piece together the link between BTC manipulation and adjacent monetary paths, e.g., US stock market fluctuations and the recent bank failures.
  - LoganDark 3y ago
    I've paid for things with Bitcoin before. Unless by "essentially" you mean to say that those types of transactions don't make up a significant network volume.
qindra 3y ago
if you think about it in the long-term, the rewards eventually go to zero and there's no incentive for any of the miners to mine and the whole thing collapses
- thatguy0900 3y ago
  I was under the impression that long term, the fees will increase and the fees will be the miners reward
  - paulgb 3y ago
    Unlike the block reward (mining subsidy) which is set according to a fixed schedule, fees are set by the market. They will go up if demand for L1 transactions go up, but there’s nothing in the protocol to push them up over time. Satoshi’s vision was for Bitcoin to be used as digital cash[1], so that transaction demand would be enough to sustain the security of the system. Since the “cash” use case has fallen away to the “store of value” use case, it seems a bit dubious. Transaction costs have recently gone up because of ordinals and NFTs so we’ll see if that sticks. [1] the Bitcoin paper was called “Bitcoin: a Peer-to-Peer Electronic Cash System”
    - faefox 3y ago
      Did the original "digital cash" thesis ever make sense? It's my understanding that Bitcoin can never hope to scale to meet a fraction of daily real-world transaction volume outside of adopting a so-called L2 solution like Lightning Network, which would seem to defeat the point somewhat.
      - paulgb 3y ago
        It certainly couldn’t have covered all of human commerce, but it could cover the sort of transactions where having an uncensorable, irreversible transaction is worth paying a premium for (silk road, etc.)
    - RustyRussell 3y ago
RustyRussell 3y ago
Yes, Bitcoin is designed to migrate from the current inflation subsidy to fees paid by the users of the system. https://rusty-lightning.medium.com/the-three-economic-eras-of-bitcoin-d43bf0cf058a https://rusty-lightning.medium.com/the-three-economic-eras-o... for more detail that you probably want...
- FabHK 3y ago
  Indeed, and then the cost of a single transaction (around USD 50 currently) will be borne by the sender/recipient, rather than by all Bitcoin holders via increase of the money supply (as is the case now). (Note that the actual cost is probably higher due to externalities in the waste of electricity and equipment, and borne by all of us.)

refulgentis 3y ago

Is this accurate? Theres some sort of side-storage mechanism in Bitcoin that you can essentially pay for, but its little trafficked. But its used for NFTs. And for whatever reason this entity bought a ton of "NFT UPCs", which has the side effect of driving up transaction costs because they're spammy transcitions on limited bandwidth.

mvdtnz 3y ago

> they pushed up fees for everyone else (there is limited block space, so miners take the highest bids) Imagine if your Visa card became hundreds of times more expensive to use during the Christmas shopping period.

Paul-Craft 3y ago
My Visa card doesn't cost me anything to use, because I don't carry a balance. It costs the merchant money to process the transaction, which would get passed on to consumers in general as higher prices. So, if this happened, what you'd see is people complaining about "inflation."
- foogazi 3y ago
  >> Imagine if your Visa card became hundreds of times more expensive to use during the Christmas shopping period. > My Visa card doesn't cost me anything to use Gp said imagine
  - Paul-Craft 3y ago
    0 * 1000 = 0 Actually, my card costs me negative money to use. I get cash back with no annual fee.
    - ilyt 3y ago
      That's just costing other side of the transaction
    - lxgr 3y ago
      And who do you think pays for that cashback?
      - deleted 3y ago
        [deleted]
- cirrus3 3y ago

nullc 3y ago

> Most of them are created by a single entity, Those that aren't are probably created by other people intending to immediately sell them to a single entity: https://www.reddit.com/r/ethereum/comments/13e3di3/can_someone_explain_brc20_to_me_and_how_it/jjsse09/ https://www.reddit.com/r/ethereum/comments/13e3di3/can_someo...

RustyRussell 3y ago

Oops, too late to edit, but apparently this is a paid inscription service, not a single whale user: https://twitter.com/mononautical/status/1663383996561072129?s=20 https://twitter.com/mononautical/status/1663383996561072129?...

tromp 3y ago

> Such few pressure is expected to be the norm eventually Or rather, such fee pressure is required to be the norm eventually for bitcoin to remain secure when block subsidies become insignificant (halving every 4 years, 1024x less in 4 decades).