Topic: Mining fees will eventually kill bitcoin - page 3. (Read 6502 times)

Maybe we have a different definition of the word "transaction". When I say "transaction", maybe I should have used the word "confirmed transaction". It's not that Bitcoin has a lack of people wanting to make transactions, the scarcity limits the number of possible transactions that can be confirmed.

You got my point absolutely wrong

First of all, Bitcoin transactions cannot be scarce by definition, otherwise blocks wouldn't be full (according to your logic). There is an outright contradiction in these few sentences above, i.e. transactions are scarce while blocks are full (that's an impossible combination). Further, I don't mind if you quote part of my posts (as long as you don't get that part completely out of context and distort the meaning of the whole post), but in this case, I explained it elsewhere in my post that the transaction jam is artificial and intentional. I even mentioned a thread about some mining pool consistently not including half of the transactions leaving their blocks half empty lately. With mempool now being chronically overcrowded, there is only one plausible explanation behind that. You guess what

This would happen in a free market. If it becomes cheaper to produce bicycles, sales prices can go down.
But Bitcoin transactions are scarce. Unlike new bicycles, users have to compete with eachother.

If blocks wouldn't be full, it would make perfect sense to pay a lower fee (measured in Bitcoin) if the Bitcoin-price (measured in USD) goes up.

Suppose Bitcoin could handle 8 times more transactions. Fees would be lower, but more transactions means more fees anyway. And more importantly: Bitcoin could facilitate 8 times more users, which means the price could go up an order of magnitude. How can miners not see this?

The fees is not determined with the valuation in dollars and when all the coins are mined transaction charges will be the only incentives they have to keep on running the huge farms and in the mean time it wont be that profitable and the possibility that the fees will increase in the future is imminent unless and until the core developers find a solution for all these issues.

What to do ? Everyone is working for their own benefits and hence miners too.
Actually with bitcoin prices above $1200 levels, we must have transaction fees lesser than 10k satoshi. But we are being forced to pay 10 times more fees. It is really pathetic situation like how miners of blocking scalability of block size.

The block size and mining fees are highly interrelated, I believe both will get resolved in our favour way in very near future. Because this is how a decentralized system should work.

We all knew fees would play a paper once all coins full mined, we didnt know we would have to start paying bigger fees now to miners proces the same transactions as they made in the past since now each satoshis has much more value. It were to keep the same fees or atleast reduce the fee, but looks like miners wanna go other way, and those might damage a lot bitcoin.

See my post above

You seem to be (likely erroneously) assume that we have a truly fair market system. While your logic looks to be pretty consistent, your basic premises appear to be wrong (i.e. a free market existing). There was a thread recently about some mining pool deliberately not filling up found blocks with mempool being overfilled. That pretty much tells it all. If there were a truly free market in respect to mining (with hundreds of independent miners), such actions would make absolutely no sense since transactions not included in this block will be included in the next block found by another miner. But just because there would be plenty of miners, they would be massively disincentivized to act like this miner does, By doing that (i.e. pushing half-empty blocks), such miners would be shooting themselves in the foot. They would be just giving away transaction fee profits to other, less rogue miners. But since this is not a free market at all (with only a dozen of miners processing 99% of all transactions), the free market laws fail miserably here

That's right. Many participants of the site explain bitcoin as the way to skip that kind of fees that we usually pay for money transfer. But actually all this sites that work with bitcoin are taking their fees as well. And unfortunately there are not so many places here that would work with bitcoin directly. So every time the process of turning bitcoin into fiat takes from me like 10% and it's a lot.

This means Bitcoin is coded to Transaction fee war, which can be fixed if the Developer are so keen about the possibility of the thing that is happening right now.  But well I can say developer are developer and probably they lack knowledge about economics.  Aside from that they only base their codes according to their current country's situation and pricing ignoring the other part of the world that even a cent cost a fortune for them.

I guess, if only they implement a first sent, first serve method, there will be no confirmation that will be unconfirmed for several days.

LOL, that's really shit. The miners are too greedy to take more fees from every transaction. It looks like they are not care about the bitcoin scalability problem and try to vote on the wrong way and it means killing the bitcoin in the future. I don't agree with your opinion.

This is already happening. I tried to send a transaction of 0.001 BTC with a 5000 satoshis fee and I couldn't complete it. After more than one week the satoshis came back to the wallet, operation canceled. If the technology doesn't evolve to support more transactions at same time it will become even worse. And transaction spammers will always exist, principally if someone wants to sabotage Bitcoin.

While I do agree that mining fees can kill Bitcoin due to the fact that it will eventually suck out all of our money, I don't think that it will be the death of Bitcoin.

The mining fees really depend on the user base existing within the Bitcoin community, and the overall competition to receive/send their money quickly. As the user base grows, the demand for mining efficiency grows along with it. Therefore, the prices will increase as well. Of course, there are plenty of other factors that relate to this issue.

In this case, though, I recommend you just change the fee that you pay. That's what I do anyway. Of course, I don't want my payment to become static and never move, thus I try to increase the fee to about 5000 satoshi per payment. It usually takes a couple of hours to process which isn't terribly long. But, I'll admit, there needs to be a solution to the problem. Sooner or later our low fee transactions are going to take days to process and people will flock to sell their Bitcoins. In such a case, we may never see this "honeymoon" period in BTC value ever again.

This is an oversimplified view on the "standard market economy"

Before anything, if the amount of profit obtained per block goes up, that should necessarily cause the fees to drop, nor rise (in a free market). I guess this is the first thing that should happen if there were a genuine competition between miners. In other words, more profits first increase the competition among existing miners (and only later new miners join in). The reason for this is that miners aim at earning certain margin, if this margin goes up, the competition increases and the margin goes down to its typical level. But it can go down only through lowering fees provided the number of transactions remains more or less the same (which seems to be the case here). But the latter should lead to cancelling out the competition between users (this competition is causing the rise in fee amount they have to pay). To put it differently, both of these things cannot exist simultaneously. That's what my point basically comes down to


The main issue with your example is that there may not be any real new foreign company in the town, i.e. the number of transactions seems to be artificially increased via flooding the network with spammy transactions. Really, why would people want to transact more if the fees have risen?

I've always thought that mining fees were going to be the future of bitcoin?

I mean sure, they are a bit too high right now for bitcoin to be competitive. Remember how we used to say "bitcoin compared to Paypal and Perfectmoney transaction fees of 2% each transaction is so good"? Well now we are losing that competitive edge.

But still, as mining rewards drop in the future the most important method of income will be through the transaction fees people pay to get their transactions confirmed. I think that if the fee keeps increasing as is the price, then bitcoin has no future.

How is it the miners causing this? It seems to be the inevitable outcome of a truly fair market system where a limited number of transactions can be processed at any one time. Competition over a limited amount of block space is what determines the price of the transaction fee. If all the payers refused to pay a fee above 20 sats/byte, miners would have no choice but to accept that as the fee because nothing else is available. Because there is competition for this limited space, and people willing to pay more to essentially line jump, the miners aren't causing the price to rise, they're just reaping the reward from it. The limited space in the block and competition for a slot in it is what is causing transaction fees to rise as transaction volume creates more congestion to compete against.

Essentially, miners serve two functions, they verify transactions while propagating the network. The miner who "solves" each block gets to include whichever transactions in the block he wants. Obviously, to maximize his own reward, he will choose the transactions that have the highest fees/byte. This is why over time, mining will get more expensive and the fees it takes to get your transactions into a block will increase. If you don't pay a high enough fee, you'll constantly be line-jumped by everyone willing to pay more. This is a free-market system, but not a cost efficient one.

Yes, this is very much the point I was making. As new coin originations fall, miners will demand more fees to supplement the income they need to continue mining. This will lead to a dramatic increase in the fees in bitcoins, and also make transactions cost-prohibitive in dollars. I would think this would cause a decrease in demand for bitcoin when it becomes too expensive to transact with, and thus, a fall in the price.

Let's learn it from the example,

There were 10 billboards in the city and 10 advertisers. The billboard holders decided to charge $1 per day for the billboard. Every advertiser was happy with one billboard by paying $1 for it.

Now, 100 foreign companies entered the town (Because Trump was not the mayor, lolz) in the year and they started approaching billboard holders to put their advertisements on the billboard.

The billboard holder said he will charge the same rate as usual to everyone but those who want to put their ads on the priority basis will have to pay extra priority charges. He was charging $1 (the same rate for advertising) but he was giving more priority to those companies willing to pay more priority charge (depending on the compititiors offer for the same).

In the same way, miner fees are the same for confirmation but since some users are paying high fees (priority charge) for their transactions, usual transactions are getting delayed confirmation.

Then if it is the users why does there are fees that were ignored?  And we can see that there is always an update of the standard fee that can be accepted?  Who then set these fees?  I use electrum and using it with dynamic fee auto adjust the fee and I noticed it is ever increasing.

Mining is very simple: if it's worth the investment, you can start mining! Google for a "mining calculator", and you get an estimate on the return for a certain hash rate.
If the turnover per block goes up, miners earn more money in the short term. Longer term, it will lead to new investments, which will lead to an increase in hash rate, which means a new equalibrium is found until it's not profitable to invest anymore for new actors to join.
It's basically standard market economy.