Increasing Block size lowers the value of Bitcoin

The One

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Quote from: BitcoinBarrel on August 17, 2017, 01:08:49 PM

Just think about the Blockchain as high demand realestate. If there is an office building right in the middle of town, and all the local businesses want to rent office space; creating more offices will just lower the scarcity.

Transaction fees are proportional to the price of Bitcoin. If the fees rise due to increased transactions then that means demand is high, thus increasing the price/btc.

WHAT!!

illyiller

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Quote from: Granxis on August 20, 2017, 05:39:31 PM

Today I made two transfers with Bitcoin Cash, I believe the money transfers will be approved very quickly, but it is over one hour is not approved, Fork did not reflect on us. Failed fork.

Remember, even with Bitcoin, when significant hash power is added to the network (bringing expected block time below 10 minutes on average), there are times when a block isn't found for an hour -- even 2-3 hours. Blocks being published occurs in a Poisson distribution, meaning that there is no guarantee that a block will be found every ten minutes. You might wait an hour for one block, after which another 2-3 blocks will be found in another 10 minutes.

I haven't paid close attention to Bitcoin Cash difficulty adjustments, but I know it has adjusted quite a lot. With the significant increase in profitability, I'd have assumed the network would be pretty stable by now.

Granxis

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Today I made two transfers with Bitcoin Cash, I believe the money transfers will be approved very quickly, but it is over one hour is not approved, Fork did not reflect on us. Failed fork.

drwhobox

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Increasing the Block size = more transactions to be fitted on a block. alot would be using bitcoin again due to fast transaction from a person to another guy on the blockchain. for me, Bigger block = stable price

squatter

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STOP SNITCHIN'

Quote from: severaldetails on August 20, 2017, 04:02:39 AM

I am not sure if the price of bitcoin is really connected to blocksize or hashrate anymore.
The profit of miners surely is.
But what controls the bitcoin price is the demand.
And the demand comes from investor at the moment.

One consideration here: mining is a form of investment. And given the massive overhead to enter the sector at this point, it is a long term investment. If you are investing into BTC mining, you are bullish on the price, long term, and you are a holder (beyond selling what is necessary to cover overhead).

Quote from: severaldetails on August 20, 2017, 04:02:39 AM

One reason for the big rise of bitcoin price is that the miners can not produce new bitcoins as fast as the market is asking for it.
With bigger blocksize or higher hashrates you only make the transaction times smaller or the fees lower. But that is not what an investor really cares about.

I think investors are less concerned about fees, as long as increasing fees aren't detrimental to organic adoption and network growth. There was a lot of fear mongering going around that say fees have been detrimental, but I think it's clear by now that there is strong demand for BTC regardless of past or present fees.

severaldetails

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I am not sure if the price of bitcoin is really connected to blocksize or hashrate anymore.
The profit of miners surely is.
But what controls the bitcoin price is the demand.
And the demand comes from investor at the moment.
One reason for the big rise of bitcoin price is that the miners can not produce new bitcoins as fast as the market is asking for it.
With bigger blocksize or higher hashrates you only make the transaction times smaller or the fees lower. But that is not what an investor really cares about.

DoublerHunter

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I don't think that the block size increase will lower the value of bitcoin because the result for me, will become opposite and the value of bitcoin will increase as the block size increase too because it will allow to have a smoother flow of transaction because of the increased in the block size so there will be more people using bitcoin and it will reflect to the price for having a pump.

squatter

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Quote from: cryp24x on August 20, 2017, 02:52:24 AM

Definitely not!! I cannot see how transaction fee makes bitcoin price higher. In fact if transaction fee goes up many supporter whines about it and thus making this supporter turn their back on bitcoin when they whining is not heed.

There's been a loud minority crying about fees for years now. Given the community's reaction to Bitcoin XT, Classic and Unlimited, it became clear that attempting to force a coercive hard fork on users would fail. It still looks like most users, services and miners (besides Bitmain) support Core, smaller blocks and Segwit, but Bitcoin Cash (as a non-coercive hard fork) was a smart way to go about this.

Using market manipulation and Bitmain's hashpower, the backers of Bitcoin Cash can give the appearance of organic adoption and market demand of BCH, whereas the backers of Bitcoin XT, Classic and Unlimited couldn't do this.

Jet Cash

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Quote from: 5trade on August 17, 2017, 07:33:06 PM

perhaps, op, but having small blocks/slow transactions also lowers the value of bitcoin. i think the key is balance here.

Small blocks and slow transactions are not the same thing. Doubling block size, but not waiting until they are full before generating them, is wasteful, and doesn't really help. What is needed is faster transaction processing, and with a 10 minute average block generation time, it can never be fast. Eventually block generation will have to be below one minute in my opinion. Why don't we try to move towards it now. Waiting a few years means that blocksize will have to be reduced, and that will introduce more complications.

cryp24x

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Definitely not!! I cannot see how transaction fee makes bitcoin price higher. In fact if transaction fee goes up many supporter whines about it and thus making this supporter turn their back on bitcoin when they whining is not heed.

sasaku bitbit

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In my opinion that to develop the block size of the bitcoin means price increases it because with the increase in the size of the blocks and then with these entrepreneurs price bitcoin can count in USD transactions also increased in size blocks bitcoin transactions then it will decrease thus increasing the block size decreases the value of Bitcoin Wink

lionheart78

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Quote from: Mister1k on August 20, 2017, 01:24:31 AM

Quote from: odolvlobo on August 19, 2017, 10:19:42 PM

Quote from: BitcoinBarrel on August 17, 2017, 01:08:49 PM

Just think about the Blockchain as high demand realestate. If there is an office building right in the middle of town, and all the local businesses want to rent office space; creating more offices will just lower the scarcity.

Transaction fees are proportional to the price of Bitcoin. If the fees rise due to increased transactions then that means demand is high, thus increasing the price/btc.

The flaw in you logic is that demand can be high even if fees are low. I apologize if this has already been pointed out.

As I noticed the bitcoin price and fees, transaction fees also increased again in online wallet. When compare the fees two weeks before now bit oin transaction fees is doubled than that time. I expect wallet providers to reduce that or we have to switch to desktop wallet.

And I do not think that higher fee means higher bitcoin. It can be the other way around since the value of transaction fee relies on the Bitcoin and USD exchange. When it comes to blocksize, I do not thing that higher blocksize will make bitcoin price less because of the lower transaction fee. Since the reason for the lower transaction fee is the lower satoshi charge on every byte sent. It can attract more users since it is cheaper to transact bitcoin and in fact can give higher demand which means higher price of Bitcoin.

Mister1k

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Quote from: odolvlobo on August 19, 2017, 10:19:42 PM

Quote from: BitcoinBarrel on August 17, 2017, 01:08:49 PM

Just think about the Blockchain as high demand realestate. If there is an office building right in the middle of town, and all the local businesses want to rent office space; creating more offices will just lower the scarcity.

Transaction fees are proportional to the price of Bitcoin. If the fees rise due to increased transactions then that means demand is high, thus increasing the price/btc.

The flaw in you logic is that demand can be high even if fees are low. I apologize if this has already been pointed out.

As I noticed the bitcoin price and fees, transaction fees also increased again in online wallet. When compare the fees two weeks before now bit oin transaction fees is doubled than that time. I expect wallet providers to reduce that or we have to switch to desktop wallet.

Sithara007

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Quote from: HasHe on August 20, 2017, 01:02:56 AM

I don't understand how you came to this conclusion.We earlier faced a huge problem in bitcoin network due to high transaction fee which was mainly due to limited block size of 1 MB.Even the problem grew to that extent that some stared saying that people would nstart leaving bitcoin network due to high fee and they would switch to some other altcoin which provides speed transactions at very low cost.That was the main reason for increasing the block size to 2 MB and it would only help for the progress of bitcoin and its increase in price.

High fee is exactly the reason why the altcoin share in the crypto-coin market capitalization rose from less than 10% to around 53% as of now. Else, how can you explain a brand new altcoin such as Bitcoin Cash having a market cap of $15 billion?

illyiller

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Quote from: odolvlobo on August 19, 2017, 10:19:42 PM

Quote from: BitcoinBarrel on August 17, 2017, 01:08:49 PM

Just think about the Blockchain as high demand realestate. If there is an office building right in the middle of town, and all the local businesses want to rent office space; creating more offices will just lower the scarcity.

Transaction fees are proportional to the price of Bitcoin. If the fees rise due to increased transactions then that means demand is high, thus increasing the price/btc.

The flaw in you logic is that demand can be high even if fees are low. I apologize if this has already been pointed out.

The OP is coming to the wrong conclusion. It's not about correlation to demand for BTC (reflected by price). The issue of transaction fees regards what you point out: that there can be high demand for BTC transactions if fees are low (or if transactions are free). Transactions also function as highly secure distributed storage on the blockchain. Of course there will be perpetual demand for that at cheap/free prices!

So the real problem with increasing block size is that by keeping fees cheap and perpetually allowing the blockchain to bloat, it becomes increasingly difficult for most node operators to continue running full nodes which secure their bitcoins. This is a threat to decentralization, but not necessarily to demand for BTC.

HasHe

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I don't understand how you came to this conclusion.We earlier faced a huge problem in bitcoin network due to high transaction fee which was mainly due to limited block size of 1 MB.Even the problem grew to that extent that some stared saying that people would nstart leaving bitcoin network due to high fee and they would switch to some other altcoin which provides speed transactions at very low cost.That was the main reason for increasing the block size to 2 MB and it would only help for the progress of bitcoin and its increase in price.

no0dlepunk

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Quote from: skyline247 on August 17, 2017, 05:03:04 PM

Quote from: BitcoinBarrel on August 17, 2017, 01:08:49 PM

Just think about the Blockchain as high demand realestate. If there is an office building right in the middle of town, and all the local businesses want to rent office space; creating more offices will just lower the scarcity.

Transaction fees are proportional to the price of Bitcoin. If the fees rise due to increased transactions then that means demand is high, thus increasing the price/btc.

The problem with your analogy is just because fees are high does not mean the price will go up or that is why the price is up. Think of it this way yes when fees are high it means there is more demand, but also people will stop using Bitcoin if the fees stay high and the supply will go up and demand drops and the price drops. We need a measure to keep fees lower in order to assure that everyone can continue using Bitcoin not only rich people or big drug dealers who can afford to pay high fees. Hope this makes sense!

Well mate, I have to agree with skyline247 because increasing the blockchain size will invite more to use bitcoins. What BitcoinBarrel was saying is that when more offices are available in the middle of the town, the scarcity will lower; He had disregarded the possibility of people from the neighboring towns would consider renting those office spaces too.

The right vision for bitcoins is to be able to use it conveniently, transfer funds fast, and be used by an average Joe. Ordinary people doesn't care about blockchain anyway, all they care about is sending money hassle free... like Visa and Mastercard.

odolvlobo

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Quote from: BitcoinBarrel on August 17, 2017, 01:08:49 PM

Just think about the Blockchain as high demand realestate. If there is an office building right in the middle of town, and all the local businesses want to rent office space; creating more offices will just lower the scarcity.

Transaction fees are proportional to the price of Bitcoin. If the fees rise due to increased transactions then that means demand is high, thus increasing the price/btc.

The flaw in you logic is that demand can be high even if fees are low. I apologize if this has already been pointed out.

Yuhee

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Quote from: JohnBitCo on August 19, 2017, 10:10:51 PM

Quote from: BitcoinBarrel on August 17, 2017, 01:08:49 PM

Just think about the Blockchain as high demand realestate. If there is an office building right in the middle of town, and all the local businesses want to rent office space; creating more offices will just lower the scarcity.

Transaction fees are proportional to the price of Bitcoin. If the fees rise due to increased transactions then that means demand is high, thus increasing the price/btc.

I dont think that Bitcoin transaction fee are proportional to the price of Bitcoins as more or high fee does not determine the demand of bitcoin. Bitcoin tx can increased many more times with no tx fees even , because the blockchain size determine the tx and there is no collaboration of bitcoin demand with transaction fee. The bitcoin demand is determined by the usage of bitcoin and its limited supply will make bitcoin price very high in the near future. Increasing blocksize rather makes the transaction confirmation time a lot faster.

Well for me i pay .001 always in my transaction just to be sure that my payments would be recognize. Because i see many trends that they paid some fee and it said 84hours to confirm. I've been paying this fee ever since the start of price increase. But for some, they downloaded the bitcoin core for better sending of payment. I agree that the fee increase as btc increase but i think we just have to accept that that is one of its chanhges maybe it wont be forever that the fees would be that high but at least the team is making something to address this issue.

JohnBitCo

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Quote from: BitcoinBarrel on August 17, 2017, 01:08:49 PM

Just think about the Blockchain as high demand realestate. If there is an office building right in the middle of town, and all the local businesses want to rent office space; creating more offices will just lower the scarcity.

Transaction fees are proportional to the price of Bitcoin. If the fees rise due to increased transactions then that means demand is high, thus increasing the price/btc.

I dont think that Bitcoin transaction fee are proportional to the price of Bitcoins as more or high fee does not determine the demand of bitcoin. Bitcoin tx can increased many more times with no tx fees even , because the blockchain size determine the tx and there is no collaboration of bitcoin demand with transaction fee. The bitcoin demand is determined by the usage of bitcoin and its limited supply will make bitcoin price very high in the near future. Increasing blocksize rather makes the transaction confirmation time a lot faster.

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