Can bitcoin sustain itself on fees alone? - page 2.

squatter

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Quote from: Pursuer on January 27, 2019, 03:20:01 AM

people would still mind if the fees were high and remained high. no matter if they made thousands of transactions over at Lightning Network or if it is their one time transaction on-chain from their wallet to another wallet. besides LN is not supposed to do everything, it is supposed to be the "second layer" and to perform seamlessly the "first layer" which is on-chain has to perform as it should meaning no huge backlogs and no unreasonable high fees.

This comes back to the age-old question: What are "high fees?" Shouldn't we expect fees to rise over time, since they must replace the block subsidy? That was the original design, as I understand it.

Let's imagine a future decades from now, where speculation and block subsidy have much less influence on price. In the long run, shouldn't there be a strong relationship between transaction fees and the actual cost to mine transactions?

Right now, miners are effectively subsidizing that cost through speculation. They're willing to mine transactions for pennies on the dollar because they're in an arms race to mine the block subsidy. Many halvings out, that incentive will disappear. If we want similar or better security, we'll need to pay for it as users -- as fees.

superstarbtc

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once the bitcoin lightening network gets implemented then we can see fees may get reduce all is in market conjunction and fast transactions

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Quote from: Pursuer on January 27, 2019, 02:53:59 AM

Quote from: r1s2g3 on January 27, 2019, 02:47:36 AM

I have this question earlier also and somebody suggested that LN will be able to solve the problem. If bitcoin cost is high, major transaction will be done on LN and when the channel is closed it will written in blockchain and miner will get good fees for that transaction. But user will not mind it because they have transacted multiple times in LN channel so cost per transaction is still small for user.

Sorry: It is all from my memory as I recall, might be some facts get distorted.

the only way that LN can help miners earn some additional income is if they also run a Lightning Node alongside their Bitcoin Node that they have to run to be able to get transactions to include in their blocks. so they can earn additional income.
what you said doesn't make sense because in the end they are still making one transaction on-chain and that transaction has the usual fee like any other transaction so there is no additional income for the miners.

Is that the best solution you can give? Miners to run Lightning nodes to earn additional income?? Miners would rather mine another coin, I reckon hehehe.

allthingsluxury

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Bitcoin and Cryptos in general are going to continue to evolve and adapt to continue to remain profitable and survive. Fees will be play a strong part in this.

xWolfx

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Quote from: ?? on ??

IMO That's horrible idea because :
1. Not all users make lots of transaction on LN which makes fee to open/close expensive to users
2. Few users still prefer on-chain transaction, especially if both party can't found route path or/and sure they only make one transaction
3. Few users use bitcoin to avoid high fees on banks or wire transfer

For now. The truth is that in the future those scenarios will be a lot more likely to happen and widely utilize with mass adoption. Think of a bank, what makes fees so powerful for them? Precisely the volume of costumers they handle for one part even when that is not their only revenue source.

The truth is that the market is still changing and adapting. In the future we will barely recognize what we are seeing right now in the sense of the way we do things and what we recognize or not.

squatter

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Quote

The paper states that “proof-of-work can only achieve payment security if mining income is high, but the transaction market cannot generate an adequate level of income.”

Auer argues that because the block rewards are decreasing with time, the security of payments decreases and transaction fees become more important to guarantee finality. He says that “the economic design of the transaction market fails to generate high enough fees.”

He's not accounting for the transitional phase as we shift from inflation to fee market. It's possible that in these early years, speculation largely fuels mining security -- investors and miners are speculating on future transaction growth. He's not really allowing for the possibility that this transaction growth actually comes to fruition.

As long as scarcity of block space exists, transaction demand -- if sufficient to fill blocks -- should create a fee market. As fees rise, miner revenue increases. As fees fall, miner revenue decreases. Hopefully in the latter case, it would happen slowly enough that difficulty can adjust downward in an orderly fashion to allow continued mining profitability.

Pursuer

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Quote from: r1s2g3 on January 27, 2019, 03:00:48 AM

Quote from: Pursuer on January 27, 2019, 02:53:59 AM

because in the end they are still making one transaction on-chain and that transaction has the usual fee like any other transaction so there is no additional income for the miners.

I am saying at that time that single transaction will not be costing a few cents, instead it will be costing some dollars for each transaction. User will be doing most of transaction in LN, so they will not mind paying the high fees in blockchain when they will close channel.

people would still mind if the fees were high and remained high. no matter if they made thousands of transactions over at Lightning Network or if it is their one time transaction on-chain from their wallet to another wallet. besides LN is not supposed to do everything, it is supposed to be the "second layer" and to perform seamlessly the "first layer" which is on-chain has to perform as it should meaning no huge backlogs and no unreasonable high fees.

r1s2g3

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Quote from: Pursuer on January 27, 2019, 02:53:59 AM

because in the end they are still making one transaction on-chain and that transaction has the usual fee like any other transaction so there is no additional income for the miners.

I am saying at that time that single transaction will not be costing a few cents, instead it will be costing some dollars for each transaction. User will be doing most of transaction in LN, so they will not mind paying the high fees in blockchain when they will close channel.

Pursuer

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Quote from: r1s2g3 on January 27, 2019, 02:47:36 AM

I have this question earlier also and somebody suggested that LN will be able to solve the problem. If bitcoin cost is high, major transaction will be done on LN and when the channel is closed it will written in blockchain and miner will get good fees for that transaction. But user will not mind it because they have transacted multiple times in LN channel so cost per transaction is still small for user.

Sorry: It is all from my memory as I recall, might be some facts get distorted.

the only way that LN can help miners earn some additional income is if they also run a Lightning Node alongside their Bitcoin Node that they have to run to be able to get transactions to include in their blocks. so they can earn additional income.
what you said doesn't make sense because in the end they are still making one transaction on-chain and that transaction has the usual fee like any other transaction so there is no additional income for the miners.

r1s2g3

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I have this question earlier also and somebody suggested that LN will be able to solve the problem. If bitcoin cost is high, major transaction will be done on LN and when the channel is closed it will written in blockchain and miner will get good fees for that transaction. But user will not mind it because they have transacted multiple times in LN channel so cost per transaction is still small for user.

Sorry: It is all from my memory as I recall, might be some facts get distorted.

Pursuer

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Quote from: Wind_FURY on January 27, 2019, 01:45:31 AM

Quote from: franky1 on January 23, 2019, 08:10:05 AM

people DO NOT need to pay high fee's to make bitcoin mining functional. here is why

1. having an increased transaction count per block can offset this.
EG 2000 tx of 25cents doesn't mean 2000 tx of 50cents after a halving. instead 4000 tx of 25cents offers the same solution
this is not a point where the usual snake charmers shout out "gigabytes by midnight" or "blockchains cant scale".
reality is they can scale. and it doesnt need to be jumping extra large real fast. but progressively over time

Are you finally admitting that the block size increase in Segwit was the right decision at the right time? Cool

no, he is still saying the same thing as ever. to increase the block size itself with a hard fork but instead of jumping to a ridiculous number like 32 byte, go at it with a slower pace like increase to 2 MB first then maybe a couple of years later to 3 or something like that.
although I still don't understand why he is denying SegWit's scaling that happened already!

Wind_FURY

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Quote from: franky1 on January 23, 2019, 08:10:05 AM

people DO NOT need to pay high fee's to make bitcoin mining functional. here is why

1. having an increased transaction count per block can offset this.
   EG 2000 tx of 25cents doesn't mean 2000 tx of 50cents after a halving. instead 4000 tx of 25cents offers the same solution
   this is not a point where the usual snake charmers shout out "gigabytes by midnight" or "blockchains cant scale".
   reality is they can scale. and it doesnt need to be jumping extra large real fast. but progressively over time

Are you finally admitting that the block size increase in Segwit was the right decision at the right time? Cool

You know there are trade-offs in block size increases, and that the Core developers need to make conservative design decisions to avoid breaking the network. It's not as easy as you make everyone believe.

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Quote from: Kakmakr on January 25, 2019, 01:12:00 AM

The introduction of the Lightning Network have open up a new source of income to these miners. They can host LN nodes and generate additional income from that and it can supplement their income from Bitcoin miners fees in the future.

I also think more second layer applications will be added to the Blockchain network in the future and running nodes for this will also help to cover their expenses.

Miners will have to adapt to survive. Wink

That might be a solution hehehe. However, there is a more natural solution for miners and Asic manufacturers. To diversify and mine altcoins.

CryptoBry

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Quote from: zenrol28 on January 23, 2019, 03:45:24 AM

Quote from: bbc.reporter on January 22, 2019, 09:21:05 PM

Is Raphael Auer's paper fact or fud?

It will be a fact if bitcoin today will the bitcoin until the last coins were minted. I think the developers know that, but it's way too early to be bothered with it, there are more important things to be done first. But some FUDs came from facts anyways, but were only solved that's why they became a fud afterwards.

Quote from: gentlemand on January 22, 2019, 09:40:49 PM

Luckily we'll be dead or in nappies before this becomes a major problem.

Quite right. Let the people living on that time solve that and let us, the early bitcoin users, rest in peace.

I have been wondering the same thing though on a non-technical level since I am not good in deciphering many technical matters related to Bitcoin or cryptocurrency. Yeah, right, by the time this can be a big challenge all of us who are here in this era of Bitcoin would already be resting underground or if you believe in the Christian religion then we can be already in the Kingdom come. As always with anything in this world, as long as there is a market for that something then any problem can be given solutions as long as there can be rewards on doing so. Let's hope then that Bitcoin can be able to survive into those years.

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The introduction of the Lightning Network have open up a new source of income to these miners. They can host LN nodes and generate additional income from that and it can supplement their income from Bitcoin miners fees in the future.

I also think more second layer applications will be added to the Blockchain network in the future and running nodes for this will also help to cover their expenses.

Miners will have to adapt to survive. Wink

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Quote from: gentlemand on January 24, 2019, 09:51:30 PM

Quote from: bbc.reporter on January 24, 2019, 09:48:02 PM

A layer 2 does not solve the miners' problem to be incentivized, I reckon. It competes with it in fee collection. How is that advantageous for the miners who already have their incentives halved every 4 years?

You don't get no layer two without accessing it via layer one. In a successful scenario demand for layer one space would be enormous. It would be an occasional thing to interact with it, not every single time you move money.

However, layer 2 will also make moving coins using layer 1 lesser in demand that would also cause the fees to go down? How would no incentives and low fees sustain the miners in securing the blockchain?

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Quote from: gentlemand on January 24, 2019, 09:51:30 PM

You don't get no layer two without accessing it via layer one. In a successful scenario demand for layer one space would be enormous. It would be an occasional thing to interact with it, not every single time you move money.

the idea of lightning is that people that have coins on exchanges(cold stored for months/years anyway). where users do not withdraw them to the blockchain personal private keys.
but instead an exchange 'credits' a user with a unaudited/unconfirmed 12 decimal channel balance

this is where exchanges become "factories" (custodians) thus the amount of transactions occurring onchain REDUCE.

trying to say that there will be more transactions onchain is a false notion. as the whole point of LN is to take demand AWAY from bitcoin network

what happens will be that the bitcoin network will end up just processing custodian(factory) batch transactions as they swap reserves.

and individual users are left stuck in joint contracts(not 100% control) channels. or paying huge fee's if they want self control
all for the FALSE rhetoric that fee's need to be high and utility needs to be low

CarylnThanny

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i think it cannot. vey hard to do that. do you think so?

gentlemand

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Quote from: bbc.reporter on January 24, 2019, 09:48:02 PM

A layer 2 does not solve the miners' problem to be incentivized, I reckon. It competes with it in fee collection. How is that advantageous for the miners who already have their incentives halved every 4 years?

You don't get no layer two without accessing it via layer one. In a successful scenario demand for layer one space would be enormous. It would be an occasional thing to interact with it, not every single time you move money.

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Quote from: gentlemand on January 23, 2019, 09:54:54 PM

Quote from: bbc.reporter on January 23, 2019, 09:46:27 PM

Was that something that we should celebrate about, however? I reckon people who might potentially want to use bitcoin regularly might instead choose to use an altcoin because they get the same results without paying for the high fees.

Also, escaping by saying that we are dead before it becomes a major problem is like already accepting that there is no fix to the problem.

That's the luxury of being dead. All of one's problems are solved instantly and eternally.

All of this experimentation in recent years is heading towards what the core developers have been mumbling about all along - all necessary scaling is looking increasingly like an impossibility on chain.

There are two likely outcomes. Either something comes along that isn't BTC that does scale on chain which is more than possible though whether BTC is too entrenched by then is another matter, or it does the layer two thing.

If it is to be layer two then on chain transactions will be large and carefully planned which'll provide a much steadier fee situation than the current ad hoc spikes.

A layer 2 does not solve the miners' problem to be incentivized, I reckon. It competes with it in fee collection. How is that advantageous for the miners who already have their incentives halved every 4 years?

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