Topic: Bitcoin cannot survive on transaction fees alone so why do we even bother? - page 2. (Read 475 times)

Are ASICs really an unforeseen technological advancement? ASICs have been used in other industries for years and obviously
make sense in situations where efficiency on a single task is more important than being
good at many different tasks.

If I recall it correctly Satoshi also predicted that mining would become very competitive and that
eventually CPU mining would become obsolete. Regarding the actual topic I think BTC will thrive even
when the block reward hits zero. Transaction fees will be extremely high by then and BTC will be used mainly
for big transactions. Expressed in $ fees will likely be a multiple of the fees today, but as a percentage of the
BTC price they will still be pretty cheap.

It simply does not make sense to stop providing miners with the incentive that drove them to mine in the first place and would push them to discontinue mining. Bitcoin core can't willingly shift to another proofing algorithm amidst everything else but then again, it has been providing updates and I'm sure this issue will be addressed too.

Quitting on the first ever cryptocurrency which has grown over 1500% this year alone over the fees problem would be plain stupidity with what is to come in the near future.

It is a serious issue altogether,Transaction fees is something which makes bitcoin more costly than it is and reduces the ultimate profit which investors have desired.It is the lone and probably the biggest problem btc is facing and is not attracting investors at all.Even i think transaction fees should banned or it should be fixed so that it never increases again.But the question is who can do this?

I never thought about this but you surely know your point and i do agree with that since this is what's actually happening. Users can set on what price they will going to pay for every of their transactions and not the miner's itself. And also if the Lightning Network were available you won't be facing the 'delayed confirmations' problem again. Relax, and everything will be fine.

Please have a look at this paper

https://www.bitcoinunlimited.info/resources/feemarket.pdf

Since the original design didn't really have a blocksize limit, it's likely that the plan was to just have more users transacting on-chain and the fees spread more evenly between them.  That way, fees would be healthy and fair for both miners and users.  But with mining becoming so specialised in the ridiculously short space of time it did, that effectively negated any practical chance of normal, everyday people running what the whitepaper (arguably mistakenly) assumed would be a "node".  However, It's important to raise the distinction that every time the whitepaper uses the phrase "nodes" it actually means what we now refer to as "miners".  

Instead, we ended up with this awkward middle class, who unfortunately get none of the advantage of block rewards and all of the burden of maintaining a full copy of the ledger.  Those are what we now think of as full nodes that form the backbone of the network and miners are something else.  The original concept only had miners and SPV users.  There were no full nodes that didn't mine.  So in a way, it could be seen as slightly perverse that those who run full nodes claim to have the most power and influence over the network when they weren't even a part of the design, but it sadly couldn't be avoided after mining became more centralised that it ought to be.  So, for better or worse, we do now need full non-mining nodes for the sake of decentralisation and we can't ignore the importance of that.  

If it weren't for that hiccup, there would be less of an issue and on-chain scaling wouldn't be so contentious.  More throughput would mean a greater quantity of fees being paid, so the individual fees wouldn't need to be so high.  But we can't increase throughput significantly without decimating the full node middle class who we rely on to preserve decentralisation.  Basically, it all went a bit off-script due to unforeseen technological advancements (namely ASICs) and now we're making the best of a less-than-ideal situation.  Perhaps it does raise questions over Bitcoin's longevity, but it's likely we'll find a solution later down the line.

From the top of my head

BTC = 7 transactions a second
ETH = 15 per second
IOTA = 100 per second
VISA Card = 25,000 per second

Block-Chain is a disaster and does not scale as we can see

We need big brother and bankers out of the loop but that does not mean we need 80,000 machine all keeping a
copy of a data 200gb structure that needs processing from start to end to calculate if a wallet has the coins/token to spend.

Keep going like this and BTC will still trade but it will all be based on fake coins like Coinbase is using or we will end up
with a flood of paper type gold tokens trading at 200:1 to physical gold.

You don't measure data costs in bytes but mega bytes and if machines want to compete in doing useless calculations
so that they can win a prize and eat up tons of electricity then what does that tell you about the design.

The block chain solves a few problems and created ten more but both hardware manufactures and
electrical providers love it.

The whole concept needs a re-think and the Lightning network sticking plaster from what I have read won't hold
and will lead to others financial costs within the system.

It's okay.  We've come to expect it from you.


And the equivalent of $6 fee per transaction for the miners to make 10% of what they were making for the coins they mined.

And the equivalent of $6 fee per transaction for the miners to make 1% of what they were making for the coins they mined.

How much is the right amount?  How do you know?


And yet the network operated just fine in the past back when it was $60 per transaction.  It also operated just fine in the past back when it was $6 per transaction.  If it coud operate fine at those levels in the past, why won't it operate fine at those levels in the future?


Yes.


It will depend on what on-chain scaling solutions are adopted in the future.  Assuming, for the moment, the unlikely event that nothing about the protocol ever changes again, I'd expect fees to eventually be a few thousand dollars per transaction.  When someone needs to move tens of millions of dollars internationally in less than an hour, they'll be happy to pay a fee of a few thousand dollars.


Exactly how would you prevent someone from paying a fee if they want to?

If you "remove fees", and I contact a mining pool and offer to send them a payment to confirm my transaction in their next block, how are you going to prevent me from doing that?


Actually, it is quite literally: "Give them an inch and they take the whole inch."

Miners can't take more fees than you give them.  The transaction sender chooses the fees they want to pay, and the miner takes the entire fee amount that is offered (and not a satoshi more than that).


Because the users are willing to pay for confirmations.


I think you haven't taken the time to think this through.

Transaction fees are set by users, and not by miners. If you don't want to pay high fees, then don't submit transactions offering to pay high fees.

+1 - Until the high fee and network congestion issues are solved, this is no different than a traditional bank. The whole point of a virtual currency is dissolved by these hurdles. If the core team doesn't act quick, its not far before LTC/XRP take over the market with their super fast network.

Satoshi Nakamoto designed the network in such a way that miners will get rewards for their mining, even after the Block reward expired. The Block reward was just a temporary incentive to get people to start mining and to mine new bitcoins.

After all bitcoins are mined, the miners fees will have to serve as the reward for the resources they use to hash the blocks. Take away the miners fees and they will not continue mining and the whole experiment would fail.

I heard that the lightning network will drive down the transaction fee in the future, is it possible?

However, it need to take the balance between miner and user. 

This sure is an issue. The high fees has been driving many Bitcoin investors to cause problems in payments. Bitcoin's purpose itself was to be used to make peer to peer transactions and remove the traditional banking system. But the congested network and high fees for the miners has made it completely opposite. The high fees is too much since the transfer through traditional banking is way cheaper than BTC. The delayed confirmations is also an issue when compared to net transfers through banks are way more faster. Until Bitcoin doesn't solve these issues Bitcoin cant rise successfully and will eventually go down.

In the future fees will account for more and more percentage of mining rewards, and this is the only way it can really work. Blockchain space will always be limited so people can donate spare resources of their home PC's to ensure decentralization of Bitcoin's network, so onchain transaction fees will be high - easily hundreds or thousands of dollars, and onchain transactions will be used for moving only big amounts of value. Small transactions will happen on higher layers like LN or on sidechains or whatever other cool solutions people will come up with. Onchain fees will always be fair because users will be essentially buying access to the most secure and trustless value transfer system in the world due to miners PoW - without sufficient PoW the system wouldn't be able to sustain past certain amounts of value, because it would become lucrative to attack it.

Alternative solution would be to increase blocksize to gigabytes, so fees will be cheaper but their sum would still buy enough PoW, but that would mean that there will be just a few full nodes in the world that can be very easily attacked by governments or can use their power to enforce whatever rules they like.

You could also remove 21mil cap to keep subsidizing PoW with mining rewards forever, but this would remove a lot of value from Bitcoin, which in the end might net less PoW than any of previous solutions.

Sorry for a lazy post but I did the calculation a while back and when bitcoin was only a few thousand dollars, if there were no coins bieng mined there would have to be the equivalent of $60 fee per transaction for the miners to make as much as they were making for the coins they mined.  Now with bitcoin at the price it currently is, it would cost hundreds of dollars per transaction.  Do we really believe that bitcoin could survive on just fees alone?  How much are people really willing to pay?

So why not just ban fees altogether?  It has become 'give them an inch and they take a mile' since we allow fees miners are making record amounts on the coins itself and they double dip and take record amounts of fees.  Why?  Because they can.  I think it was a mistake to allow fees in the first place.