The cost of bitcoin system is too high.it is not a cheap payment at all. - page 2.

doggieTattoo

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Quote from: oyasumi on January 11, 2015, 07:25:58 PM

Quote from: countryfree on January 11, 2015, 12:02:04 PM

Quote from: oyasumi on January 11, 2015, 06:10:15 AM

Compare to mainframe used in banks,the cost of Bitcoin is much more higher.Now transaction fee is low because the cost of system is undertake by people who buy bitcoins,not people who use bitcoins.

The cost of using Visa and MC is huge. Shops must buy a dedicated terminal which costs at least $300, and there's a higher fee to pay for each transaction. Then there's Visa which I'm sure has back office with servers in every country the service is offered. We're talking of a network with several thousands dedicated servers in it. This wasn't made in a day, and it took billions to build...

1.
In Bitcoin system,the number of transactions per ten minutes is about 200 times.In Visa clearing system,the number is millions.

When you calculate the cost per transaction, it is generally accepted that the cost to process a bitcoin transaction is lower when you calculate the estimated electric cost. If you use the value of found blocks (including block subsidies) then visa is cheaper

Quote

2.
Bitcoin system is clearing system,but visa is not just clearing system(BASE II).
For example,if you lost your visa card,you can contact to visa,let them handle the problem.
you can also save money when you go shopping.
It need money,but it is not the cost of visa clearing system.

You would actually contact the issuing bank to replace your lost/stolen credit card. The same goes with any payment disputes. The payment network would generally be unaffected

Quote

3.
Servers in visa clearing system just process transactions,but in Bitcoin system,Servers also do hash race,and just one servers' working is effective at one time.
If there is no block reward,the transactions fee would be about 30 dollars in Bitcoin system.

If there was no block subsidy (not reward) then yes the cost per transaction would be higher, although it would not quite be $30 per transaction. The theory is that over time the number of transactions will increase enough so that TX fees will rise enough to cover the reduced block subsidies.

pedrog

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Freedom doesn't come cheap!

Troonetpt

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yes it waste too much energy.

cryptworld

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it is actually not expensive because you could maintain the network with less miners.

the point it that more and more miners are insanely increasing the network power

oyasumi

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Quote from: ?? on ??

Quote from: oyasumi on January 11, 2015, 08:18:44 AM

You mean transactions' processing is not contained in mining?
It's seem to be different from my understanding.
Just 218 transactions per 10 minutes,cost is 6950 dollars,is it because of PoW,will it happened again after 20 years later?
For example,there are some transactions,it need one computer to process,but in Bitcoin system,it need 200 computers to hash race,20 computer to process transactions itself,and just one computer's working is effective.So how can bitcoin's cost be lower?

I don't get your point.
1. See https://blockchain.info/charts/n-transactions we have ~ 100000 transactions/day, this results in 694 transactions/10minutes
2. I won't agree to set costs to 6950 dollar, in case I mine all bitcoins and safe them in my wallet, the costs to mine do not change but the price would highly probably went up and so your calculated costs would went up too.
3. I would not set dollar as the basis for a calculation of the costs, because the dollar should not be seen as a "god", and if we really want to discuss the costs, we should have a look at the energy consumption, needed materials for example to build miner/computer, working hours and so on.

1.
I just talk about an example,which shows the real average cost of Bitcoin system.
2.
In fact,it has gone up too if you use it now.
The system cost is relative to the price now,because it is paid by block reward(25 coins).
And the security level is relative to the system cost.
3.
If the block reward is zero,to keep the same security level,the transaction fees will be about 30 dollars.

oyasumi

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Quote from: freebit13 on January 11, 2015, 09:08:54 AM

Quote from: oyasumi on January 11, 2015, 08:31:07 AM

Quote from: Elwar on January 11, 2015, 08:03:30 AM

Quote from: oyasumi on January 11, 2015, 07:44:37 AM

338492    16 minutes    306    3,975.02 BTC    KnCMiner    134.8
338491    18 minutes    174    4,104.85 BTC    GHash.IO    99.3
338490    23 minutes    73    755.77 BTC    AntPool    62.36
338489    22 minutes    66    707.01 BTC    KnCMiner    36.18
338488    25 minutes    418    10,970.23 BTC    AntPool    521.66
338487    31 minutes    269    4,067.65 BTC    85.195.114.243    685.81
---------------------------------------------------------------------------------------
Average number of transactions per block:218
The value of 25 bitcoins:278*25=6950
The cost of per transaction:6950/218=31.8(dollars)

218 transactons per ten minutes,It can be processed by a Gameboy or APLLE II.But in Bitcoin system,it need 6950 dollars per ten minutes,30024000 dollars per month.

So, when the block reward is cut in half will the cost to run the network half as well?

How many coins are rewarded each block for the PoS, Litecoin system?

It will be two possibility：transactions fee higher or security lower.
The biggest part of Bitcoin system'cost is for defending from 51% attack.

You've confused the block reward and the transaction fees. The 25 bitcoin reward is paid to the miners by the bitcoin network and that will halve in 2016. The transaction fees are what is paid over and above the 25btc block reward. At the moment it is usually less than 1btc per block and that it all that is paid by the users as transaction fees.

Developers can set transaction fees to any number,and the system will be no change,because the cost of Bitcoin system is not paid by transaction fees,but by block reward now.
If the block reward is zero,to keep the same security level,the transaction fees will be about 30 dollars.

oyasumi

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Quote from: countryfree on January 11, 2015, 12:02:04 PM

Quote from: oyasumi on January 11, 2015, 06:10:15 AM

Compare to mainframe used in banks,the cost of Bitcoin is much more higher.Now transaction fee is low because the cost of system is undertake by people who buy bitcoins,not people who use bitcoins.

The cost of using Visa and MC is huge. Shops must buy a dedicated terminal which costs at least $300, and there's a higher fee to pay for each transaction. Then there's Visa which I'm sure has back office with servers in every country the service is offered. We're talking of a network with several thousands dedicated servers in it. This wasn't made in a day, and it took billions to build...

1.
In Bitcoin system,the number of transactions per ten minutes is about 200 times.In Visa clearing system,the number is millions.
2.
Bitcoin system is clearing system,but visa is not just clearing system(BASE II).
For example,if you lost your visa card,you can contact to visa,let them handle the problem.
you can also save money when you go shopping.
It need money,but it is not the cost of visa clearing system.
3.
Servers in visa clearing system just process transactions,but in Bitcoin system,Servers also do hash race,and just one servers' working is effective at one time.
If there is no block reward,the transactions fee would be about 30 dollars in Bitcoin system.

countryfree

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Quote from: oyasumi on January 11, 2015, 06:10:15 AM

Compare to mainframe used in banks,the cost of Bitcoin is much more higher.Now transaction fee is low because the cost of system is undertake by people who buy bitcoins,not people who use bitcoins.

The cost of using Visa and MC is huge. Shops must buy a dedicated terminal which costs at least $300, and there's a higher fee to pay for each transaction. Then there's Visa which I'm sure has back office with servers in every country the service is offered. We're talking of a network with several thousands dedicated servers in it. This wasn't made in a day, and it took billions to build...

VectorChief

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Quote from: FandangledGizmo on January 11, 2015, 08:27:19 AM

I don't think there will be many POW coins. The vast majority of coins today are POW, yet they are constantly declining in market share and soon Bitcoin will be the only POW in the top 7 if Litecoin continues it's descent.

I think POW has been proved inefficient by the market already.

That's not to say Bitcoin can't maintain it's position, it still dwarfs all the competition put together.

However if my hypothesis is true that Bitcoin is trending constantly down without a catalyst due to being too volatile for businesses, then I imagine even Bitcoin will be replaced by a 2.0 offering stable dollar & currency options but backed by unstable crypto-currency.

I'm pretty sure that only PoW coins are agile and flexible enough to grow into some really Big Badgers that would then take on the Big Brothers of this world and eat them good Grin

. That's the main reason they were created, the rest is just noise in a form of bells and whistles. In that sense, Bitcoin and Litecoin are ~~brothers~~ badgers for life!

Elwar

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Quote from: oyasumi on January 11, 2015, 08:31:07 AM

Quote from: Elwar on January 11, 2015, 08:03:30 AM

Quote from: oyasumi on January 11, 2015, 07:44:37 AM

338492    16 minutes    306    3,975.02 BTC    KnCMiner    134.8
338491    18 minutes    174    4,104.85 BTC    GHash.IO    99.3
338490    23 minutes    73    755.77 BTC    AntPool    62.36
338489    22 minutes    66    707.01 BTC    KnCMiner    36.18
338488    25 minutes    418    10,970.23 BTC    AntPool    521.66
338487    31 minutes    269    4,067.65 BTC    85.195.114.243    685.81
---------------------------------------------------------------------------------------
Average number of transactions per block:218
The value of 25 bitcoins:278*25=6950
The cost of per transaction:6950/218=31.8(dollars)

218 transactons per ten minutes,It can be processed by a Gameboy or APLLE II.But in Bitcoin system,it need 6950 dollars per ten minutes,30024000 dollars per month.

So, when the block reward is cut in half will the cost to run the network half as well?

How many coins are rewarded each block for the PoS, Litecoin system?

It will be two possibility：transactions fee higher or security lower.
The biggest part of Bitcoin system'cost is for defending from 51% attack.

Even with PoS, the cost would be the same per block.

freebit13

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Quote from: oyasumi on January 11, 2015, 08:31:07 AM

Quote from: Elwar on January 11, 2015, 08:03:30 AM

Quote from: oyasumi on January 11, 2015, 07:44:37 AM

338492    16 minutes    306    3,975.02 BTC    KnCMiner    134.8
338491    18 minutes    174    4,104.85 BTC    GHash.IO    99.3
338490    23 minutes    73    755.77 BTC    AntPool    62.36
338489    22 minutes    66    707.01 BTC    KnCMiner    36.18
338488    25 minutes    418    10,970.23 BTC    AntPool    521.66
338487    31 minutes    269    4,067.65 BTC    85.195.114.243    685.81
---------------------------------------------------------------------------------------
Average number of transactions per block:218
The value of 25 bitcoins:278*25=6950
The cost of per transaction:6950/218=31.8(dollars)

218 transactons per ten minutes,It can be processed by a Gameboy or APLLE II.But in Bitcoin system,it need 6950 dollars per ten minutes,30024000 dollars per month.

So, when the block reward is cut in half will the cost to run the network half as well?

How many coins are rewarded each block for the PoS, Litecoin system?

It will be two possibility：transactions fee higher or security lower.
The biggest part of Bitcoin system'cost is for defending from 51% attack.

You've confused the block reward and the transaction fees. The 25 bitcoin reward is paid to the miners by the bitcoin network and that will halve in 2016. The transaction fees are what is paid over and above the 25btc block reward. At the moment it is usually less than 1btc per block and that it all that is paid by the users as transaction fees.

oyasumi

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Quote from: Elwar on January 11, 2015, 08:03:30 AM

Quote from: oyasumi on January 11, 2015, 07:44:37 AM

338492    16 minutes    306    3,975.02 BTC    KnCMiner    134.8
338491    18 minutes    174    4,104.85 BTC    GHash.IO    99.3
338490    23 minutes    73    755.77 BTC    AntPool    62.36
338489    22 minutes    66    707.01 BTC    KnCMiner    36.18
338488    25 minutes    418    10,970.23 BTC    AntPool    521.66
338487    31 minutes    269    4,067.65 BTC    85.195.114.243    685.81
---------------------------------------------------------------------------------------
Average number of transactions per block:218
The value of 25 bitcoins:278*25=6950
The cost of per transaction:6950/218=31.8(dollars)

218 transactons per ten minutes,It can be processed by a Gameboy or APLLE II.But in Bitcoin system,it need 6950 dollars per ten minutes,30024000 dollars per month.

So, when the block reward is cut in half will the cost to run the network half as well?

How many coins are rewarded each block for the PoS, Litecoin system?

It will be two possibility：transactions fee higher or security lower.
The biggest part of Bitcoin system'cost is for defending from 51% attack.

FandangledGizmo

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Merit: 1001

Quote from: VectorChief on January 11, 2015, 07:16:07 AM

Quote from: oyasumi on January 11, 2015, 06:51:53 AM

Quote from: VectorChief on January 11, 2015, 06:38:50 AM

Banks and visas of this world can impose sanctions and freeze your accounts, Bitcoin allows you to stay independent if you are willing to put some effort into it, while still maintaining integrity of the whole system and keeping its global reach.

Of course,it is Bitcoin's advantage.But I I doubt how many people will be going to use Bitcoin if transactioin fee is 30 dollars in 2030.

Dollars might not be around that far into the future, at least in their current form with current debt figures.
Transaction fees will be kept low as block size limit will increase throughout this year.

Quote from: FandangledGizmo on January 11, 2015, 06:55:49 AM

Yes Decentralized currencies give you a great deal of personal freedom that banks can't compete with that has value.

Bitcoin also still currently costs 1/3 of the price of traditional payment options even when using BitPay to convert back to fiat.

POS of course is even cheaper. Personally I expect dollar stable assets which only charge 1¢ per transaction to revolutionize global remittance & payments this year

https://bitcointalksearch.org/topic/m.10078463

I also expect this to reverse the crypto-currency downtrend because they solve the volatility problem.

https://bitcointalksearch.org/topic/volatility-is-this-the-reason-for-the-bear-market-920345

I believe there will be a few PoW coins and a few PoS coins and maybe a few PoI coins around competing with each other. PoW is better suited for PoWer players (as its name suggests) like nation states and big international corporations, PoS and PoI will be filling the niches for distributed asset exchanges and other fancy stuff for end users.

Quote from: Q7 on January 11, 2015, 06:57:34 AM

I'm not sure what is the actual cost to maintain the whole payment system compared to the conventional fiat system. Also I have never seen a detailed calculation made to date. However I have seen some proposals being put forward before on power generation companies utilizing the excess power towards maintaining the network. So in general there are bound to be solutions which we can use to address the issue (if that is an issue in the first place)

If mining is performed at nearly break-even point, then current cost of the system is simply the emission of new coins, it's part of their value equation. That's what makes PoW coins tangible in real world as they are literally a cryptographic proof-of-work. Later on mining might be performed at a loss if competition for control over the system is stronger than the monetary incentive, that's mostly politics and flexing the muscles at that point. The cost of mining over the long-term will be reflecting the disagreements of major players, which cannot otherwise be resolved at the round table.

I don't think there will be many POW coins. The vast majority of coins today are POW, yet they are constantly declining in market share and soon Bitcoin will be the only POW in the top 7 if Litecoin continues it's descent.

I think POW has been proved inefficient by the market already.

That's not to say Bitcoin can't maintain it's position, it still dwarfs all the competition put together.

However if my hypothesis is true that Bitcoin is trending constantly down without a catalyst due to being too volatile for businesses, then I imagine even Bitcoin will be replaced by a 2.0 offering stable dollar & currency options but backed by unstable crypto-currency.

oyasumi

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Quote from: ?? on ??

Quote from: oyasumi on January 11, 2015, 07:44:37 AM

338492    16 minutes    306    3,975.02 BTC    KnCMiner    134.8
338491    18 minutes    174    4,104.85 BTC    GHash.IO    99.3
338490    23 minutes    73    755.77 BTC    AntPool    62.36
338489    22 minutes    66    707.01 BTC    KnCMiner    36.18
338488    25 minutes    418    10,970.23 BTC    AntPool    521.66
338487    31 minutes    269    4,067.65 BTC    85.195.114.243    685.81
---------------------------------------------------------------------------------------
Average number of transactions per block:218
The value of 25 bitcoins:278*25=6950
The cost of per transaction:6950/218=31.8(dollars)

218 transactons per ten minutes,It can be processed by a Gameboy or APLLE II.But in Bitcoin system,it need 6950 dollars per ten minutes,30024000 dollars per month.

You mix mining (coin generation := central bank) and handling transactions.
In fact you also generate coins while processing transactions.
The cost for Bitcoin is the cost to have a financial system.
The costs will always be > 0.
But the costs for Bitcoin are < the costs for the classical financial system.

You mean transactions' processing is not contained in mining?
It's seem to be different from my understanding.
Just 218 transactions per 10 minutes,cost is 6950 dollars,is it because of PoW,will it happened again after 20 years later?
For example,there are some transactions,it need one computer to process,but in Bitcoin system,it need 200 computers to hash race,20 computer to process transactions itself,and just one computer's working is effective.So how can bitcoin's cost be lower?

Elwar

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Activity: 3598

Merit: 2386

Viva Ut Vivas

Quote from: oyasumi on January 11, 2015, 07:44:37 AM

338492    16 minutes    306    3,975.02 BTC    KnCMiner    134.8
338491    18 minutes    174    4,104.85 BTC    GHash.IO    99.3
338490    23 minutes    73    755.77 BTC    AntPool    62.36
338489    22 minutes    66    707.01 BTC    KnCMiner    36.18
338488    25 minutes    418    10,970.23 BTC    AntPool    521.66
338487    31 minutes    269    4,067.65 BTC    85.195.114.243    685.81
---------------------------------------------------------------------------------------
Average number of transactions per block:218
The value of 25 bitcoins:278*25=6950
The cost of per transaction:6950/218=31.8(dollars)

218 transactons per ten minutes,It can be processed by a Gameboy or APLLE II.But in Bitcoin system,it need 6950 dollars per ten minutes,30024000 dollars per month.

So, when the block reward is cut in half will the cost to run the network half as well?

How many coins are rewarded each block for the PoS, Litecoin system?

oyasumi

newbie

Activity: 28

Merit: 0

Quote from: ?? on ??

Quote from: oyasumi on January 11, 2015, 06:35:02 AM

...
It is needed in Bitcoin system,but not needed in bank or visa system.
So how does Bitcoin compete wiht banks and visa etc.

Just the ATM machines worldwide use way more electricity than the Bitcoin network...
This series of articles is worth a look on comparisons of energy usage:
http://www.coindesk.com/tag/Under-the-Microscope/

I don't know it is real or not,but if Bitcoin developed,Bitcoin also need ATM.
Bitcoin is a clearing network,should not be confused with ATM.

Kluge

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^That's obviously not fair. The network isn't being well-utilized, and Gavin's already started campaigning for increasing the block size limit 20x (to solve a currently-non-existent problem). -And you can't really look at the mining cost at all since Bitcoin could operate exactly the same with just one AMD K6 mining. Anyway, I think the scarier numbers to look at involve the costs to relay the transaction queue and blockchain, which definitely won't be trending toward zero any time soon.

Quote from: ?? on ??

Quote from: oyasumi on January 11, 2015, 06:35:02 AM

...
It is needed in Bitcoin system,but not needed in bank or visa system.
So how does Bitcoin compete wiht banks and visa etc.

Just the ATM machines worldwide use way more electricity than the Bitcoin network...
This series of articles is worth a look on comparisons of energy usage:
http://www.coindesk.com/tag/Under-the-Microscope/

Umm... Do the Bitcoin ~~ATMs~~ ~~kiosks~~ "transaction facilitators" more than a couple companies want to become ubiquitous not count? Do all the full nodes operating not count? Online wallet services? What about block explorers?

I doubt mining takes up more than ~20% of electricity consumption if Bitcoin were looked at as carefully as other trade mediums in that article.

oyasumi

newbie

Activity: 28

Merit: 0

338492    16 minutes    306    3,975.02 BTC    KnCMiner    134.8
338491    18 minutes    174    4,104.85 BTC    GHash.IO    99.3
338490    23 minutes    73    755.77 BTC    AntPool    62.36
338489    22 minutes    66    707.01 BTC    KnCMiner    36.18
338488    25 minutes    418    10,970.23 BTC    AntPool    521.66
338487    31 minutes    269    4,067.65 BTC    85.195.114.243    685.81
---------------------------------------------------------------------------------------
Average number of transactions per block:218
The value of 25 bitcoins:278*25=6950
The cost of per transaction:6950/218=31.8(dollars)

218 transactons per ten minutes,It can be processed by a Gameboy or APLLE II.But in Bitcoin system,it need 6950 dollars per ten minutes,30024000 dollars per month.

Elwar

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Activity: 3598

Merit: 2386

Viva Ut Vivas

So...go buy Litecoin and get it accepted?

Problem solved. For the rest of us, Bitcoin works.

VectorChief

newbie

Activity: 56

Merit: 0

Quote from: oyasumi on January 11, 2015, 06:51:53 AM

Quote from: VectorChief on January 11, 2015, 06:38:50 AM

Banks and visas of this world can impose sanctions and freeze your accounts, Bitcoin allows you to stay independent if you are willing to put some effort into it, while still maintaining integrity of the whole system and keeping its global reach.

Of course,it is Bitcoin's advantage.But I I doubt how many people will be going to use Bitcoin if transactioin fee is 30 dollars in 2030.

Dollars might not be around that far into the future, at least in their current form with current debt figures. Transaction fees will be kept low as block size limit will increase throughout this year.

Quote from: FandangledGizmo on January 11, 2015, 06:55:49 AM

Yes Decentralized currencies give you a great deal of personal freedom that banks can't compete with that has value.

Bitcoin also still currently costs 1/3 of the price of traditional payment options even when using BitPay to convert back to fiat.

POS of course is even cheaper. Personally I expect dollar stable assets which only charge 1¢ per transaction to revolutionize global remittance & payments this year

https://bitcointalksearch.org/topic/m.10078463

I also expect this to reverse the crypto-currency downtrend because they solve the volatility problem.

https://bitcointalksearch.org/topic/volatility-is-this-the-reason-for-the-bear-market-920345

I believe there will be a few PoW coins and a few PoS coins and maybe a few PoI coins around competing with each other. PoW is better suited for PoWer players (as its name suggests) like nation states and big international corporations, PoS and PoI will be filling the niches for distributed asset exchanges and other fancy stuff for end users.

Quote from: Q7 on January 11, 2015, 06:57:34 AM

I'm not sure what is the actual cost to maintain the whole payment system compared to the conventional fiat system. Also I have never seen a detailed calculation made to date. However I have seen some proposals being put forward before on power generation companies utilizing the excess power towards maintaining the network. So in general there are bound to be solutions which we can use to address the issue (if that is an issue in the first place)

If mining is performed at nearly break-even point, then current cost of the system is simply the emission of new coins, it's part of their value equation. That's what makes PoW coins tangible in real world as they are literally a cryptographic proof-of-work. Later on mining might be performed at a loss if competition for control over the system is stronger than the monetary incentive, that's mostly politics and flexing the muscles at that point. The cost of mining over the long-term will be reflecting the disagreements of major players, which cannot otherwise be resolved at the round table.

Topic: The cost of bitcoin system is too high.it is not a cheap payment at all. - page 2. (Read 3426 times)