4 ms·

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.)

The cost will rise and fall based on demand for block space. If that demand only goes up, then yes.

"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.)