Topic: [2017-12-10] Bitcoin's Rising Transaction Costs (Read 1859 times)
As popularity grows and more people start trading or sending Bitcoins, I suppose it's expected that congestion would cause transaction fees to rise. That said, it's not hard to see how this is a thorn in the side of my newcomers and might make it hard for Bitcoin to compete with other up-and-coming currencies that have lower or no trading fees.
Transaction costs have been subject to debates for this entire year now, and still the same annoyances are being rehashed in an attempt to make it look like a new problem, while it's nothing new at all.
If we look at the coin ratio, the fees haven't gone up that much at all. It's just the increased market rate that makes these fees stand out negatively. Most of the newer people however don't look at it from that perspective.
For them it's just the fees being high and that's it. What they more often than not also don't look at, is that off-chain implementations will tackle the inconsistencies caused by greedy miners and increased usage.
Bitcoin even with SegWit fully functional isn't going to make much of a difference. We need Lightning Network.
If we look at the coin ratio, the fees haven't gone up that much at all. It's just the increased market rate that makes these fees stand out negatively. Most of the newer people however don't look at it from that perspective.
For them it's just the fees being high and that's it. What they more often than not also don't look at, is that off-chain implementations will tackle the inconsistencies caused by greedy miners and increased usage.
Bitcoin even with SegWit fully functional isn't going to make much of a difference. We need Lightning Network.
We should really realize that this issue has become one of the biggest concern that many Bitcoin holders are facing at the moment. This has been a problem for many years yet there has been no concrete and adequate steps being taken that can be acceptable by all stakeholders in the Bitcoin community.
2nd layers are the only way of scaling blockchain networks, if they are to remain independent and decentralised. No-one is being forced to buy or hold Bitcoin, you can change to a different cryptocurrency if you wish. Payment channel 2nd layers will only make that easier, but like all good things, the software development of this network tech has taken time (recent successes in live testing suggest they may be rolled out next year sometime).
May I make a suggestion? Be more positive. Presenting problems in a fashion that implies they cannot be solved, and vaguely implying irresponsibility being a cause is not constructive. Some are taking steps to actually solve the problem, you could help too if you would like to.
When it comes to large amounts in the transaction that the current payment for the confirmation is relatively small. But we all understand that the whole trade rests on small and medium-sized transactions. The price for them is huge and it continues to grow. The speed of the transaction and its price must be solved in complex. Without this, bitcoin will not be able to live.
...Affected more are the small Bitcoin holders as they are paying a very high transfer fees in comparison to what they are sending. How long can we be patient in dealing with this problem...before this whole thing can blow up before our faces?
I think the problem is only temporary. Right now small transcations are priced out of the mainlayer and small
outputs aren´t even spendable at all, because a transaction that consists of them would never confirm unless
you pay a fee that exceeds the value of the outputs.
However, in the future the Lightning network and other 2nd layer solutions will once again make it feasible to use
Bitcoin in 3rd world countries or as a small Bitcoin holder. I regard the current development as a kind of "growing pains",
which will be forgotten in a few years when everyone uses the Lightning network and the main blockchain
is mainly used for high-value settlements.
Quote
A CME Group economist believes that rising transaction costs could cause a bitcoin price crash. Erik Norland, an executive director and senior economist at U.S. derivatives exchange operator CME Group, published an article theorizing that the rising cost of bitcoin transactions could be an early indicator of an impending bitcoin price crash.
The average transaction cost is calculated by dividing miner revenue — which includes both transaction fees and block rewards — by the number of transactions made across the network. Though similarly named, it’s important to note that the transaction cost is a metric distinct from the average transaction fee, which refers exclusively to the fee that bitcoin users pay to have their transactions recorded in the blockchain.
At present, miners earn just nine percent of their revenue from transaction fees; the remainder is subsidized through the block reward. This is why the average transaction fee is so much smaller than the transaction cost — although many users still protest that fees are too high. Read more here...
The average transaction cost is calculated by dividing miner revenue — which includes both transaction fees and block rewards — by the number of transactions made across the network. Though similarly named, it’s important to note that the transaction cost is a metric distinct from the average transaction fee, which refers exclusively to the fee that bitcoin users pay to have their transactions recorded in the blockchain.
At present, miners earn just nine percent of their revenue from transaction fees; the remainder is subsidized through the block reward. This is why the average transaction fee is so much smaller than the transaction cost — although many users still protest that fees are too high. Read more here...
We should really realize that this issue has become one of the biggest concern that many Bitcoin holders are facing at the moment. This has been a problem for many years yet there has been no concrete and adequate steps being taken that can be acceptable by all stakeholders in the Bitcoin community. Affected more are the small Bitcoin holders as they are paying a very high transfer fees in comparison to what they are sending. How long can we be patient in dealing with this problem...before this whole thing can blow up before our faces?
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