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You can't measure the bitcoin infrastructure cost by the fees the miners charge. Miners are mostly paid with newly generated coins. Credit card companies do no

by Buge 13y ago

You can't measure the bitcoin infrastructure cost by the fees the miners charge. Miners are mostly paid with newly generated coins. Credit card companies do no have the luxury to create new money, so of course they will charge higher fees.

cdixon 13y ago
I agree it's imprecise. But I'd argue the de facto fees in the existing system are much higher than 2.5%. The biggest cost are all the transactions that should happen but don't. Most merchants/payment companies block payments from dozens if not hundreds of countries due to fears of fraud.
- comex 13y ago
  That's only indirectly related to Bitcoin's use of proof of work, though. While Bitcoin's overall design has advantages and disadvantages w.r.t. security, I don't know why an irreversible version of the current system wouldn't similarly be able to reduce fees without needing to "waste" CPU power computing hashes.
krakensden 13y ago
I've been wondering about the impact on the network when the end of bitcoins that can be mined comes within sight. Is the computational load going to be taken over by centralized wallet stores like Coinbase?
- sliverstorm 13y ago
  It's supposed to be a limit function, right? Payout will be ever-decreasing, and difficulty will adjust to keep mining modestly profitable forever. What I wonder about is the size of the blockchain. Bitcoin is young and fringe, and the blockchain is already several gigabytes. What happens when everyone and their brother uses Bitcoin, every day? How large will a few decades of frequent, widespread global usage make the blockchain? Supposedly VISA processed 20 billion transactions in 2006. To my knowledge bitcoin transaction occupies ballpark 1kB in the blockchain; that's 20-100TB/year, and it could be even larger when you add money-moving transactions. That storage need can be met, but only by people making a big investment in the network- in other words, centralizing the trust of the network to players with deep pockets and compromising one of the original goals of BTC.
  - erikpukinskis 13y ago
    I know of three factors that will mitigate the blockchain size issues: 1) Developer's are working on software to prune the transaction tree so miners only have to store the addresses that have nonzero balances. 2) Miners can increase their minimum transaction fees to cut down on transaction volume. 3) Moore's law (and similar) conspire to keep an ever-growing blockchain storable and manageable.
    - sliverstorm 13y ago
      There's no "Moore's Law" for storage yet, that I know of. We've been at 1-3TB disks for, what, 6 years now?
      - jamestnz 13y ago
        In fact, storage-area density apparently increases more rapidly than does transistor density (i.e. Moore's law). http://en.wikipedia.org/wiki/Mark_Kryder#Kryder.27s_Law http://en.wikipedia.org/wiki/Mark_Kryder#Kryder.27s_Law A PhysOrg.com article reports on a 2009 study by Mark Kryder. According to the report, if hard drives continue to progress at their current pace, then in 2020 a two-platter, 2.5-inch disk drive will be capable of storing more than 14 terabytes (TB) and will cost about $40.
        gwern 13y ago
        Kryder's law has been massively set back by the Thai floods: http://www.gwern.net/Slowing%20Moore%27s%20Law#kryders-law http://www.gwern.net/Slowing%20Moore%27s%20Law#kryders-law
      - qnr 13y ago
        Huh? 1tb hdd was released in 2007, 2tb in 2009 and 4tb in 2011. Looks exactly like Moore's law to me though we've been set back by Thai floods of 2011.
  - krakensden 13y ago
    > It's supposed to be a limit function, right? Payout will be ever-decreasing, and difficulty will adjust to keep mining modestly profitable forever. This only works as long as bitcoin climbs in value vs the rest of the world, no? Wouldn't a long period of price stability break this down? > What I wonder about is the size of the blockchain. Bitcoin is young and fringe, and the blockchain is already several gigabytes. What happens when everyone and their brother uses Bitcoin, every day? How large will a few decades of frequent, widespread global usage make the blockchain? My theory is that it will force Bitcoin to slowly re-centralize, with people who provide web interfaces to wallets shouldering the majority of the burden.
mvc 13y ago
> Credit card companies do no have the luxury to create new money, so of course they will charge higher fees. Credit card companies? No. Banks? Yup. http://en.wikipedia.org/wiki/Fractional-reserve_banking#Money_creation_process http://en.wikipedia.org/wiki/Fractional-reserve_banking#Mone...

by Buge 13y ago

cdixon 13y ago

I agree it's imprecise. But I'd argue the de facto fees in the existing system are much higher than 2.5%. The biggest cost are all the transactions that should happen but don't. Most merchants/payment companies block payments from dozens if not hundreds of countries due to fears of fraud.

comex 13y ago
That's only indirectly related to Bitcoin's use of proof of work, though. While Bitcoin's overall design has advantages and disadvantages w.r.t. security, I don't know why an irreversible version of the current system wouldn't similarly be able to reduce fees without needing to "waste" CPU power computing hashes.

krakensden 13y ago

I've been wondering about the impact on the network when the end of bitcoins that can be mined comes within sight. Is the computational load going to be taken over by centralized wallet stores like Coinbase?

sliverstorm 13y ago
It's supposed to be a limit function, right? Payout will be ever-decreasing, and difficulty will adjust to keep mining modestly profitable forever. What I wonder about is the size of the blockchain. Bitcoin is young and fringe, and the blockchain is already several gigabytes. What happens when everyone and their brother uses Bitcoin, every day? How large will a few decades of frequent, widespread global usage make the blockchain? Supposedly VISA processed 20 billion transactions in 2006. To my knowledge bitcoin transaction occupies ballpark 1kB in the blockchain; that's 20-100TB/year, and it could be even larger when you add money-moving transactions. That storage need can be met, but only by people making a big investment in the network- in other words, centralizing the trust of the network to players with deep pockets and compromising one of the original goals of BTC.
- erikpukinskis 13y ago
  I know of three factors that will mitigate the blockchain size issues: 1) Developer's are working on software to prune the transaction tree so miners only have to store the addresses that have nonzero balances. 2) Miners can increase their minimum transaction fees to cut down on transaction volume. 3) Moore's law (and similar) conspire to keep an ever-growing blockchain storable and manageable.
  - sliverstorm 13y ago
    There's no "Moore's Law" for storage yet, that I know of. We've been at 1-3TB disks for, what, 6 years now?
    - jamestnz 13y ago
      In fact, storage-area density apparently increases more rapidly than does transistor density (i.e. Moore's law). http://en.wikipedia.org/wiki/Mark_Kryder#Kryder.27s_Law http://en.wikipedia.org/wiki/Mark_Kryder#Kryder.27s_Law A PhysOrg.com article reports on a 2009 study by Mark Kryder. According to the report, if hard drives continue to progress at their current pace, then in 2020 a two-platter, 2.5-inch disk drive will be capable of storing more than 14 terabytes (TB) and will cost about $40.
      - gwern 13y ago
        Kryder's law has been massively set back by the Thai floods: http://www.gwern.net/Slowing%20Moore%27s%20Law#kryders-law http://www.gwern.net/Slowing%20Moore%27s%20Law#kryders-law
    - qnr 13y ago
      Huh? 1tb hdd was released in 2007, 2tb in 2009 and 4tb in 2011. Looks exactly like Moore's law to me though we've been set back by Thai floods of 2011.
- krakensden 13y ago
  > It's supposed to be a limit function, right? Payout will be ever-decreasing, and difficulty will adjust to keep mining modestly profitable forever. This only works as long as bitcoin climbs in value vs the rest of the world, no? Wouldn't a long period of price stability break this down? > What I wonder about is the size of the blockchain. Bitcoin is young and fringe, and the blockchain is already several gigabytes. What happens when everyone and their brother uses Bitcoin, every day? How large will a few decades of frequent, widespread global usage make the blockchain? My theory is that it will force Bitcoin to slowly re-centralize, with people who provide web interfaces to wallets shouldering the majority of the burden.

mvc 13y ago

> Credit card companies do no have the luxury to create new money, so of course they will charge higher fees. Credit card companies? No. Banks? Yup. http://en.wikipedia.org/wiki/Fractional-reserve_banking#Money_creation_process http://en.wikipedia.org/wiki/Fractional-reserve_banking#Mone...