Topic: Low Bitcoin Transaction Fees Unsustainable (Read 1097 times)

Low bitcoin fee is just one of the problems that the network might face when the coin's difficulty increased. However, bitcoin is designed to have a low transaction fee; one reason why users tend to choose it rather than any other payment systems out there. I don't know how the maths work here, but all I know is that for every block that is solved by the miners, they get a reward of 25 btc, and every block that is solved takes them 10 minutes to complete.

Trade confirmation will be faster

At $40/s then miners would make, on average ~$24,000 per block (600 seconds), or ~38.7 BTC per block (with BTC trading at $620).

Your assumptions include an average of $0.01 per TX, however the standard TX fee is ~$0.06 per Kb today (.0001 BTC)

This straight from the Bitcoin wiki
But I disagree with the core developers on this one, Satoshi has not been incorrect yet and their calculations are likely right on the money we are preparing for something that is going to be proven incorrect in the future in my opinion.

A fork or a sidechain reward will become increasingly likely and implemented as halvings occur in the future and the rewards basket will increase without mixing up the core transaction protocol, a bunch of merge mines like with Namecoin could make that difference basically miners will still be able to acquire subsidies in one form or another as more developments occur.
It's fine to discuss it but I disagree on the need to implement it until a few years down the line.

http://bitcoin.stackexchange.com/questions/273/how-does-merged-mining-work

Based on the abstract since I can't read the full PDF
The paper argues for a lack of supply and scarcity basic economic tenets and arguments but does not include the idea of unconventional and new supplies being acquired in the terms of new sidechains and merge mined coins.

Pretty much its like comparing a theory based on Hubbert's Peak versus one that is based on a Mckelvey box completely different approaches to the same conventional question with one being superior in accuracy to the other.

http://sdiwc.net/digital-library/near-zero-bitcoin-transaction-fees-cannot-last-forever.html

We will see though but I would be against this implementation for now although the safeguards to make it in case seem fine with me.

(Background information Hubbert in the 1970s predicted Oil Supplies in the US would fall rapidly and prices would increase he was spot on and it became canon in the oil industry for a while)
But at the same time he based it on traditional extraction methods and as new ways to acquire oil became possible the supplies increased because he underestimated the unconventional supplies and emergence of new technologies that allowed for Deep Sea Drilling or Fracking.

My argumentation for a Mckelvey box is that these new supplies when applied to cryto are sidechains and merge mined coins alongside the Bitcoin protocol that will incentivize the miners and secure new supplies in a sense.
Kind of like using Oil to make byproducts such as plastics etc not a zero-sum game but a multi-sum one with various rewards.

http://en.wikipedia.org/wiki/Hubbert_peak_theory
http://en.wikipedia.org/wiki/Mineral_resource_classification

So rather than being unsustainable I would argue that is far from proven and is nothing more than a theory at this point in time, but we will see in the future which scenario will ring most true.

Even if a consensus is included in the standard software, miners will be free to use their own price structure. Competition between miners will exist and keep the prices on a sensible level.

As for collusion, remember that in the free market, a cartel is not effective, and the market is, and will continue to be, free, for certain.

A problem that might materialize, is the problem of adding enough fee to a transaction to make sure it is included in the next block, but not more. Noteworthy here is that transactions in any other payment system also has some risk of not clearing.

If we had the number of transactions of VISA (~4K/s) at 0.01 $ per transaction, it would be 40$/s or around 1.261 billions $/year going to the mining industry.
If we count the transactions in other systems (Bancomat, etc.) we could probably double or triple this amount easily. If new uses arise allowing more payments to be made, maybe we could have 10x of the number of transactions of VISA.
Currently, the network mine around 1.5 millions bitcoin/year (around 1 billion $ at the current exchange).

In my opinion, a global payment network with its monetary system must have at least 10x of the current hashing power to be safe enough against any type of attack (safe enough to discourage attacks from hostile powerful entities).

If the network is unable to grow a revenue stream for the miners large enough with a ~0.01 $ fee, maybe doubling or tripling the fee will be necessary.
A market based approach, with the right incentives, should be able to build a revenue stream large enough to make the blockchain safe from attacks.

Over time as the number of transactions increases as bitcoin become more widely adopted the amount of TX fees per block will increase, while the TX fee per transaction will likely stay the same or decline.

How come so many people don't understand how the mining economy works. It's not difficult.

I would like to hear some commentary from non-trolls please.

Here is the original article:
http://www.coindesk.com/new-study-low-bitcoin-transaction-fees-unsustainable/