Mining fees will eventually kill bitcoin - page 4.

classicsucks

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Quote from: deisik on March 15, 2017, 11:46:28 AM

Quote from: LoyceV on March 15, 2017, 06:24:10 AM

Quote from: Idrisu on March 15, 2017, 06:13:17 AM

Mining fee is what motivate the miners to keep mining for traders and generally transactions bitcoin are made possible through activities of miners. So without mining no bitcoin and without bitcoin no transactions and without transactions no fee to pay.

You're going at this the wrong way. More fees means more competition for miners, higher hash rate, paying more on new hardware and electricity. You could argue it becomes harder to do a 51% attack, but in the end it only leads to more competition for miners.
If there would be only 1 miner, happily mining on his CPU, blocks could handle exactly the same amount of transactions. We don't need more miners to process transactions, that doesn't change how many transactions Bitcoin can handle at all

As to me, this is an absurd situation

Generally, to claim that higher fees lead to more competition between miners, you have to solve the following dilemma, i.e. to explain how it is possible that users are competing between themselves for the inclusion of their transactions in the new block by increasing the amount of money they are willing to pay for that, and at the same time (as you claim), the competition between miners rises as well. I guess you can't have it both ways at the same time in a free market

But maybe this isn't a free market because the blocksize has been artificially retarded by the Core Politburo? That could certainly cause fees and miner competition to go up simultaneously... Hmmm.

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Quote from: LoyceV on March 15, 2017, 06:24:10 AM

Quote from: Idrisu on March 15, 2017, 06:13:17 AM

Mining fee is what motivate the miners to keep mining for traders and generally transactions bitcoin are made possible through activities of miners. So without mining no bitcoin and without bitcoin no transactions and without transactions no fee to pay.

You're going at this the wrong way. More fees means more competition for miners, higher hash rate, paying more on new hardware and electricity. You could argue it becomes harder to do a 51% attack, but in the end it only leads to more competition for miners.
If there would be only 1 miner, happily mining on his CPU, blocks could handle exactly the same amount of transactions. We don't need more miners to process transactions, that doesn't change how many transactions Bitcoin can handle at all

As to me, this is an absurd situation

Generally, to claim that higher fees lead to more competition between miners, you have to solve the following dilemma, i.e. to explain how it is possible that users are competing between themselves for the inclusion of their transactions in the new block by increasing the amount of money they are willing to pay for that, and at the same time (as you claim), the competition between miners rises as well. I guess you can't have it both ways at the same time in a free market

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Quote from: Amph on March 15, 2017, 02:57:29 AM

it's common misconception that are miners increasing the fee, it's actually the user that by wanting to be first among other is paying more, the more you pay the higher is your transaction priority against other,

Even worse: it's now the default setting of many wallets to "use the best fee". That means most people now just pay more. Paying more doesn't solve the fundamental problem: blocks are too small. In the end this means the high fee still isn't enough, so the next day you'll have to pay more again. Fees have been spiralling up for quite a while now.
0.5 mBTC fee is common now for a small transaction, which is (in dollars) about 50 times more than I used just over a year ago. Unfortunately, I can only conclude this is limiting Bitcoin's growth potential.

Quote from: Idrisu on March 15, 2017, 06:13:17 AM

Mining fee is what motivate the miners to keep mining for traders and generally transactions bitcoin are made possible through activities of miners. So without mining no bitcoin and without bitcoin no transactions and without transactions no fee to pay.

You're going at this the wrong way. More fees means more competition for miners, higher hash rate, paying more on new hardware and electricity. You could argue it becomes harder to do a 51% attack, but in the end it only leads to more competition for miners.
If there would be only 1 miner, happily mining on his CPU, blocks could handle exactly the same amount of transactions. We don't need more miners to process transactions, that doesn't change how many transactions Bitcoin can handle at all.

Idrisu

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Mining fee is what motivate the miners to keep mining for traders and generally transactions bitcoin are made possible through activities of miners. So without mining no bitcoin and without bitcoin no transactions and without transactions no fee to pay.

classicsucks

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Quote from: jaysabi on March 12, 2017, 09:08:56 PM

Now that the SEC has rejected the Winklevoss bitcoin ETF, I decided to actually glance through their S-1 (registration statement) that they filed with the SEC just for the heck of it. The S-1 requires a statement and discussion of possible risks associated with a security that is seeking SEC registration. In the Winklevoss S-1, I found this section particularly noteworthy (emphasis is original):

Quote

As the number of Bitcoins awarded for solving a block in the Blockchain decreases, the incentive for miners to continue to contribute processing power to the Bitcoin Network will transition from a set reward to transaction fees. The requirement from miners of higher transaction fees in exchange for recording transactions in the Blockchain may decrease demand for Bitcoins and prevent the expansion of the Bitcoin Network to retail merchants and commercial businesses, resulting in a reduction in the Blended Bitcoin Price.

If transaction fees paid for the recording of transactions in the Blockchain become too high, the marketplace may be reluctant to accept Bitcoins as a means of payment and existing users may be motivated to switch from Bitcoins to another Digital Math-Based Asset or back to fiat currency. Decreased use and demand for Bitcoins may adversely affect their value and result in a reduction in the Blended Bitcoin Price.

Not only is this a risk that they highlighted, my view is this is inevitable, and that mining fees will eventually become prohibitive not only to bitcoin expansion, but everyday bitcoin function. This is the flaw that will eventually render bitcoin unusable for everyday commerce, and the price will decline accordingly as demand for coins falls off as a result.

Mining fees will eventually kill bitcoin, the question is if this is avoidable with some type of change, or a predetermined fate that cannot be altered due to the nature of the ecosystem?

It depends on if Core devs can get it through their skulls that the block size needs to increase. The current people manipulating market price prefer steady volume, high mempool, "high frequency" trading. Prices can't be controlled profitably if the volume increases. On the positive side, spam and churn behavior have been taxed and reduced by fees.

The ETF would have helped the price shillers by reducing supply. I suspect the bitcoin mempool would've instantly buckled if the Twinkle Towers ever did go live with ETF trading. Good riddance,

Lightning Network is way too "hypothetical future" and likely unsound or just lame. Another geek turkey fest.

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Quote from: kryptqnick on March 15, 2017, 03:48:42 AM

Quote from: Xester on March 13, 2017, 02:18:25 AM

Mining fees will not kill bitcoin. The higher the price of bitcoin and the more users using bitcoin the difficulty in mining has increased. The miners fee are just normal and must be implemented otherwise id mining industry will stop then bitcoin will die instead. If the miner fees are high then lets dont send small amount of bitcoin several times but send a large amount of bitcoin in one go that way you can save.

Yes, I agree. I think it will all be just fine. And although amount is not increasing partly because the price grows, the fee is supposed to decrease with each halving, because smaller sum will be mined and thus smaller will get stuck between the blocks. At least from what I've been watching on btc this seems correct.
Perhaps I misunderstood some stuff though

It seems to be the case

Mining rewards as such are inconsequential to the average size of a transaction fee since the size of the reward doesn't affect the number of transactions, which seems to be the root of your confusion (it would still take only 1 transaction to receive the reward). The transaction fee (in dollar terms) is obviously in positive correlation with Bitcoin price, and this correlation should be quite close to 1. On the other hand, it could still be claimed that diminishing miner rewards would make miners look for ways to collect more fees (to compensate for the drop in rewards), and with the same block size that could be done only by raising an average fee per transaction. So in reality it will likely work opposite to what you think, i.e. fees will rise, not decline with less rewards

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Quote from: Xester on March 13, 2017, 02:18:25 AM

Mining fees will not kill bitcoin. The higher the price of bitcoin and the more users using bitcoin the difficulty in mining has increased. The miners fee are just normal and must be implemented otherwise id mining industry will stop then bitcoin will die instead. If the miner fees are high then lets dont send small amount of bitcoin several times but send a large amount of bitcoin in one go that way you can save.

Yes, I agree. I think it will all be just fine. And although amount is not increasing partly because the price grows, the fee is supposed to decrease with each halving, because smaller sum will be mined and thus smaller will get stuck between the blocks. At least from what I've been watching on btc this seems correct.
Perhaps I misunderstood some stuff though.

deisik

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Quote from: Amph on March 15, 2017, 02:57:29 AM

Quote from: carlerha on March 13, 2017, 07:11:36 PM

Quote from: Dudeperfect on March 13, 2017, 01:43:54 PM

Yes, the mining fees are getting more and more expensive day by day and we must find any concrete solution for it otherwise, it will reach the level of what other fiat companies are charging today. The core benefit of bitcoin is that it is (still) cheaper than other payment options in terms of transaction costs and it needs to remain under control.

yes i am also not in favour of increasing the mining fee. i also think that this problems must of solve on priority basis include the bitcoin transaction fee also.

it's common misconception that are miners increasing the fee, it's actually the user that by wanting to be first among other is paying more, the more you pay the higher is your transaction priority against other,

this is happening because of the limitation of the block, and this why bitcoin will not die because of fee increase

This is not a misconception, by any means

It looks more like it is you not caring or wanting to look deeper into the matter. So before aggressively hitting the Quote button, honestly answer just two questions. First, are users interested in paying more fees to miners? And second, are miners interested in users paying more fees to them? If the answer to the first question is negative while to the second positive, think again before hitting that button. Perhaps, it is you after all who is misunderstanding something here, and it is actually miners who are making the users pay higher transaction fees (whether the latter like it or not)

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no kill.
Now bitcoin price quite high.
Just logically think if u are miner, u seen bitcoin price up, u will think to up fees or not?

This is a good thing to encourage them to mine. Of course not good to us because high fee.

Don't take for granted. If people not mine, our transaction will be congested.

Amph

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Quote from: nethan1btc on March 13, 2017, 09:32:04 AM

Mining fees will not eventually kill bitcoin because they are not that big and they are now getting lower in numbers. It doesn't make thise transacting at mining to be profitable to them and even those investing to a reliable sources decline back and stop transaction with them, because most of them were scam.

they are higher than ever, 50k satoshi on average per transaction is huge, it's more than $0.5 and that is only the average, many people are paying already above $1 per transaction, how cna you say that this is small

currently miners are earning something like 1 whole btc added to their block reward, their block reward is basically 13.5 btc now

Quote from: carlerha on March 13, 2017, 07:11:36 PM

Quote from: Dudeperfect on March 13, 2017, 01:43:54 PM

Yes, the mining fees are getting more and more expensive day by day and we must find any concrete solution for it otherwise, it will reach the level of what other fiat companies are charging today. The core benefit of bitcoin is that it is (still) cheaper than other payment options in terms of transaction costs and it needs to remain under control.

yes i am also not in favour of increasing the mining fee. i also think that this problems must of solve on priority basis include the bitcoin transaction fee also.

it's common misconception that are miners increasing the fee, it's actually the user that by wanting to be first among other is paying more, the more you pay the higher is your transaction priority against other,

this is happening because of the limitation of the block, and this why bitcoin will not die because of fee increase

Goldman Enterprises

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I guess, the value of bitcoin will increase further since there will be less mining. Undecided

Its been pointed out that transactions are the main problem, It seems that paying a higher fee magically increases the speed of the transaction, I guess because it prioritizes them first over others. In that case they will continue to increase as more transactions happen and more people want things moved around faster.

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Quote from: lionheart78 on March 13, 2017, 01:36:48 PM

Quote from: Xester on March 13, 2017, 02:18:25 AM

Mining fees will not kill bitcoin. The higher the price of bitcoin and the more users using bitcoin the difficulty in mining has increased. The miners fee are just normal and must be implemented otherwise id mining industry will stop then bitcoin will die instead. If the miner fees are high then lets dont send small amount of bitcoin several times but send a large amount of bitcoin in one go that way you can save.

High mining fee may not kill Bitcoin but it will make its users to look for alternative. As far as I know the fee can be fixed by creating a standard fee and code it to Bitcoin program. I know the possibility of encrypting the code with fix tx fee (in USD value) can be done. If we let the miner decide what fee is the standard fee then we can even see 1 Bitcoin being the standard fee and that is insane. I can see in a merchants view that having this fix fee is attractive and the confirmation will be first come first serve basis to those who comply which I think is the best way

That's the worst idea that could ever be proposed

And I hope that it will never get implemented. The problem is not that miners are more and more dependent on transaction fees and thus they are hell-bent on raising the fees without particularly choosing betwen the tools to get there (e.g. flooding Bitcoin network with spammy transactions to cause artificial jams). The whole idea of fixing fees is counterproductive for Bitcoin in and of itself. It is like firmly setting the Bitcoin price against the US dollar. The fees should be determined by the free market, but that should be a free market after all, not a mining oligopoly (as what we effectively have today)

suredoood

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I think that a good solution to this would be to have price reductions, or rather, prices including fees. Starbucks does this with taxes; rather than saying $3.25 + tax or $3.25 with a surprise tax at the end, they simply have $3.45 as the price. This makes it easier for the consumer to see the worth and I think if it would be possible to have the same thing for bitcoin transactions it would work out really well.

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Quote from: DoublerHunter on March 14, 2017, 09:34:55 PM

Mining fees or transactions fees are keep on rising up and its becoming more expensive than before

https://bitcoinfees.21.co/

Quote

The fastest and cheapest transaction fee is currently 220 satoshis/byte, shown in green at the top.
For the median transaction size of 226 bytes, this results in a fee of 49,720 satoshis.

It's really high. That makes me use the off chain transaction.

https://blockchain.info/unconfirmed-transactions
No more than 20k transaction and it makes redicilous about the result of the reliable transaction fees.

DoublerHunter

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This topic is true and a threat for bitcoin because this could happen if this kind of thing will continue to happen. Mining fees or transactions fees are keep on rising up and its becoming more expensive than before and if that continues then users will find more affordable coin and it will eventually kill bitcoin from losing users or investors and also the volume in the market.

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Quote from: Dudeperfect on March 14, 2017, 02:19:37 AM

Quote from: carlerha on March 13, 2017, 07:11:36 PM

Quote from: Dudeperfect on March 13, 2017, 01:43:54 PM

Yes, the mining fees are getting more and more expensive day by day and we must find any concrete solution for it otherwise, it will reach the level of what other fiat companies are charging today. The core benefit of bitcoin is that it is (still) cheaper than other payment options in terms of transaction costs and it needs to remain under control.

yes i am also not in favour of increasing the mining fee. i also think that this problems must of solve on priority basis include the bitcoin transaction fee also.

If we are expecting bitcoin to be used on a local level then mining fees must be small and confirmation time must be less in order to the local level adoption. No one would pay 10% or something miner fees because many items are available at the price of miner fees so why would someone use bitcoin to pay more charges and time?

yes that is a fact. actually these are the small problems that are creating bad impact on the future of bitcoin. i think bitcoin will become more and more reliable and people will put more and more trust on bitcoin when these minors problems will be solve.

deisik

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Quote from: jaysabi on March 12, 2017, 09:08:56 PM

Now that the SEC has rejected the Winklevoss bitcoin ETF, I decided to actually glance through their S-1 (registration statement) that they filed with the SEC just for the heck of it. The S-1 requires a statement and discussion of possible risks associated with a security that is seeking SEC registration. In the Winklevoss S-1, I found this section particularly noteworthy (emphasis is original):

Quote

As the number of Bitcoins awarded for solving a block in the Blockchain decreases, the incentive for miners to continue to contribute processing power to the Bitcoin Network will transition from a set reward to transaction fees. The requirement from miners of higher transaction fees in exchange for recording transactions in the Blockchain may decrease demand for Bitcoins and prevent the expansion of the Bitcoin Network to retail merchants and commercial businesses, resulting in a reduction in the Blended Bitcoin Price.

If transaction fees paid for the recording of transactions in the Blockchain become too high, the marketplace may be reluctant to accept Bitcoins as a means of payment and existing users may be motivated to switch from Bitcoins to another Digital Math-Based Asset or back to fiat currency. Decreased use and demand for Bitcoins may adversely affect their value and result in a reduction in the Blended Bitcoin Price.

Not only is this a risk that they highlighted, my view is this is inevitable, and that mining fees will eventually become prohibitive not only to bitcoin expansion, but everyday bitcoin function. This is the flaw that will eventually render bitcoin unusable for everyday commerce, and the price will decline accordingly as demand for coins falls off as a result.

Mining fees will eventually kill bitcoin, the question is if this is avoidable with some type of change, or a predetermined fate that cannot be altered due to the nature of the ecosystem?

Welcome to real life, bro

This is called a bottleneck. Everything should come (or fail to come) through it to move further. Humanity itself had passed through such a bottleneck in the past as well (and likely not just once). And it seems highly likely that Bitcoin will soon get into something similar since its mining model is not sustainable in the long run (as per your post). It is just outright flawed since we see how miners reject the updates that would not just efficiently and effectively solve this very issue (of surging mining fees) but also allow to make a huge step or even jump forward in Bitcoin evolution and development as such. So it is either Bitcoin will end up abandoned and Bitcoin miners along with it or miners themselves as we know them today should be gone for good. They are contrary to the idea of money itself. Money should facilitate trade, not hinder it. So miners should be gone

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I think it can eventually do tgat if we don't act fast and get the fees down. Imagine explaining Bitcoin to a newbie after all these complications then you tell him the transaction fees are similar or a little bit lower than say PayPal, don't you think he will end up staying with what he knows than trying anything new. It's going to hurt the community so I'm calling for a change and likewise a change in confirmation times.

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Quote from: carlerha on March 13, 2017, 07:11:36 PM

Quote from: Dudeperfect on March 13, 2017, 01:43:54 PM

Yes, the mining fees are getting more and more expensive day by day and we must find any concrete solution for it otherwise, it will reach the level of what other fiat companies are charging today. The core benefit of bitcoin is that it is (still) cheaper than other payment options in terms of transaction costs and it needs to remain under control.

yes i am also not in favour of increasing the mining fee. i also think that this problems must of solve on priority basis include the bitcoin transaction fee also.

If we are expecting bitcoin to be used on a local level then mining fees must be small and confirmation time must be less in order to the local level adoption. No one would pay 10% or something miner fees because many items are available at the price of miner fees so why would someone use bitcoin to pay more charges and time?

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Quote from: Dudeperfect on March 13, 2017, 01:43:54 PM

Yes, the mining fees are getting more and more expensive day by day and we must find any concrete solution for it otherwise, it will reach the level of what other fiat companies are charging today. The core benefit of bitcoin is that it is (still) cheaper than other payment options in terms of transaction costs and it needs to remain under control.

yes i am also not in favour of increasing the mining fee. i also think that this problems must of solve on priority basis include the bitcoin transaction fee also.

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