Topic: The double edged sword of Bitcoin transaction fees! (Read 311 times)

Developers are being too conservative regarding scaling the Bitcoin blockchain. It's very unlikely BTC will experience a block size increase anytime soon. All of the attention is on the Lightning Network (L2), which is flawed by design. The ETH camp is also doing the same. Bitcoin recently had a protocol upgrade dubbed "Taproot", but we're yet to see any long term scaling even benefits on it.

If you really want to avoid paying high transaction fees, you have two choices: either pay a low fee and wait until the dust settles, or switch to an altcoin with reduced blockchain bloat. Litecoin seems to be a good alternative for payments these days. TX fees are dirt cheap compared to BTC. It's also the most widely-supported altcoin among exchanges and merchants alike. So switching from BTC to LTC shouldn't be much of an issue (unless you're a Bitcoin maxi, of course). Sometime in the distant future, Bitcoin will scale on-chain for millions of users around the world. At least, that's the dream.

1. If you increase block space, it will not instantly make fees low. It will just open more room for more Ordinals.
2. Transaction propagation is quite slow, and it takes a lot of time, to share a given mempool. You can see that during testnet3 blockstorms, when you can have 1 GB mempool, and blocks filled in 10%, or less.

You can change the default 1 sat/vB into anything lower, for example 0.001 sat/vB. You can also accept even free transactions. But it won't increase adoption. It will just bring more spam into the network.

People don't want to download over 600 GB blockchain now. So, let's increase it, so there will be even less full nodes.

Do I really read this? Especially when we see how ordinals have been pain in the neck? The negative side of current Bitcoin protocol is that it's easy to abuse the system and miners can artificially increase transaction fees by creating lots of spam transactions. As you know, transaction fees finally go into miners pockets, so miners can send multiple dust transactions and get fees paid on them back again in their pocket.

I vouch low transaction fees and high block space. Low fees will increase the adoption and high block space will help us to keep lower transaction fees but high adoption will constantly fill blocks, so miners will earn a lot in the end and there won't be much problems.

Funny enough, almost everything if not everything in life has both the good aspect as well as the negative aspects and bitcoin isn’t exempted.
I’m glad you were also able to identify that, regardless of the negative aspects of bitcoin transaction fee, the positive still outweighs the negative and one thing is that, high transaction fees in transaction are always temporary and there are always reasons to it which most times don’t even stay very long.

Want or not, you will have more of them in future even in future with better layer-2 solutions. Because these scammers know where they can maximize their scam results, it's Bitcoin on-chain.

Think of Ordinals and Runes like why their developers decided to choose and deploy their scam products on Bitcoin blockchain, but not on Ethereum and many altcoin blockchains. It's mostly because they saw that they will have higher chance to succeed and earn money if they deploy their scam works on Bitcoin blockchain firstly. After succeeded on Bitcoin blockchain, they expanded this scam type on altcoin blockchains months later.

transaction fees do not prevent spam. we have seen all the junk transaction memes that caused fee rises but didnt stop the spam. instead it stopped genuine lean transactors whom then were presented with advertising to use other networks instead. so no, fee's dont prevent spam but do reduce genuine usage

fee's even in 2024 do not secure the network. the main mining reward does. fee's are just a added bonus. fee's wont become crucial for many more halving cycles.. those promoting that fee's are important now are those that also promote that genuine users should try other networks to avoid such fee's.. we can see their true intentions of taking a middle man cut of the other network routing fee policy(and custody of the real bitcoin utxo locks)

things can be done to make things better. such as getting back to lean transactions where every byte truly counts and is truly validated and has purpose. where by it truly prevents one transactor from filling a block with a single bloated transaction of junk useless meme data. also by then having more transactors the individual fee per transaction is less than the small amount of bloated transactions paying higher fee

when in 2010 it was calculated 1mb as being a potential tx count yield upto 4200tx, and then later when 4mb was deemed network safe. we should be at a status now (if core devs cared about leanness and efficiency) be at a average tx count of nearing 16,000tx per block. yet even with 4mb blocks we still dont even average 4000tx a block(due the cludgy ways of miscounting bytes or skipping validation methods). which goes to show the lack of consideration for leanness and efficiency by the core devs. especially when you see them as the promoters of wanting to move genuine users to other networks as "the solution"

as for the silly propaganda that bitcoin should not scale(because the propaganda shows leaping to huge size), those people need to learn what scaling really is vs leaping
as for the silly propaganda that increasing transaction count per block causes huge node user cost of hardware, the funny thing is those promoting that silliness think that a single transaction of $50 is acceptable cost but a $50 hard drive upgrade to store decades of data is a bad expense to pay

At least till the point where Runes and the likes of it would be more mainstream.
I wouldn't want the chain fees to be spiked because runes-2 and "unique items" 

People have more demands of moving their bitcoins when market has big volatile movements like soar or sink. More demands, mempools will be more loaded with more waiting transactions and in such volatile times, people don't have patience to wait, they will increase fee rates higher and higher, surely higher than usual. However, it's fortunate that it does not cause to killing fee rates like 500 satoshis/ vbyte or 1000 satoshis/ vbyte like under times of artificial attacks from Ordinals and Runes. Again fortunately, these attacks are artificial and can not last too long.

Bitcoin Runes hype fades, transactions plummet 84%

The massive fee spikes are artificial and happen because of the attacks but normal ones happen as well. They are most common during market volatility when genuine people are using bitcoin for genuine reasons. For example right now if price goes above $70k we will see a big fee spike that could go above 50 sat/vb quickly as people would start making a lot more on-chain transactions.

There is always alternative, heard there are many bitcoin's L2 as well that could possibly help you solve this problem.

it's a double edged sword indeed, sending big money with bitcoin is really cheap, but sending small money is expensive, mainly as other said, because the presence of ordinal that just trying spam the blockchain with unnecessary meme coins, I won't expect this thing to be solved anytime soon.

I guess what you can do is just trying to monitor the fee and sending tx exactly when fee is reaching daily lowest.

It is not appropriate to talk about BTC fees in any currency, but in sat/vByte, because that is the only way to know the fee you'll pay for a tx based on the size of your tx.

One factor about BTC that people forget is its immutability, BTC blocks are found ~ 10 minutes on average, however, once a block has at least 6 block confirmations, it is immutable. Unlike many other coins and projects that may have a 'faster' confirmation time, but because of their 'centralized' nature, the funds still remain reversible even after a very long time.

I will never forget when we were seeing some truly absurd Bitcoin transaction fees over this past year or so. The ordinals situation was the primary culprit for that but the fees seem reasonable now at least don’t they?

The demand is not a problem. At what time did we really face a demand spike in fees? Every time it went parabolic it happened due to an attack either by shitcoiners like people responsible for BCH, or ordinals.
I don't think that we should be afraid of genuine demand and there's no reason to be afraid of small transaction spam because they can only do it for some time and it's going to cost them.

Another question is, have you ever faced a denial of service due to tx spam? You could always use bitcoin and pay the fee you liked. Worst case scenario you'd wait 2 or 3 days for it to confirm, which is not much different from bank to bank money transfers.

Just as they say not everything are roses and definitely bitcoin has its limitations which is the scalability problem and when you actually look at it critical, a breach of this scalability can also hamper bitcoin decentralization. But seriously there are far too many benefits of bitcoin that defeats this transaction fees limitations. Just like you have highlighted the only to reverse a confirmed transaction is through chain reorg which grows impossible as the blocks adds up. Compare to traditional fiat’s currency system self it is even cheap to use bitcoin for cross boarder transactions.

The ideal way is to actually just use bitcoin when the fees are high and then use other alternatives when it is high, so I don’t even see the fuss for the high transaction fee since it’s an alternative and not a must to use it.

At least there are alternatives. Nobody has to use bitcoin when the fees are very high. There are good established alts like doge, ltc and xmr which work as good as bitcoin. (most of the time faster and cheaper) Bitcoin is obviously the best choice when the fees are low but that's not always the case. Nothing beats bitcoin's safety too. The other networks might be cheaper and faster but they will never as safe as bitcoin. We are talking about a trillion dollar market cap coin here.  (1.3 trillion usd to be exact) 1.3 trillion usd market cap is no joke, this alone shows how much trust people have in bitcoin compared with alts.

It can be said that it's a storage of value with all the benefits that decentralization brings. Digital gold.

I can't agree more with you because the high fee is a big barrier to its adoption but at the same time, due to it, miners are making some money, and as you said, there is less spam but the adoption of BTC is increasing regardless of high fee and the more it will be adopted the higher fee it will be. We can't really solve this but we can use another way to face it which is L2 networks like Lightning network.

It can save us a good amount of money but to create the path we have to pay the fee for the first time and if you as a vendor get a customer who wants to pay you he can't really use L2 networks to save fees in that moment because he is one time and to create the path he have to pay the full fee. And paying higher than the cost price is very hurting sometimes. I prefer to use Binance, Coinbase or other Tier 1 exchanges which have QR code and then can directly send you funds internally so they don't have to pay the fee.

High transaction fees, yeah, they can seem like a problem, but honestly, the benefits of using Bitcoin kinda overshadow that. Since it’s decentralized, you can’t reverse transactions, unlike fiat digital currencies. Sure, they might be cheaper and faster, but they can be frozen or reversed, so they’re not exactly transparent. There's a reason Bitcoin shot up in value...from practically nothing to where it is now...people don’t see fees as a dealbreaker when thinking about Bitcoin's future worth.

When it comes to on-chain transactions, it’s hard for Bitcoin to compete with centralized digital currencies, which get confirmed way faster. But that’s just how Bitcoin works. It’s not here to replace fiat, it’s more of an alternative currency.

Transaction fees are occasionally a major issue to on-chain transaction and usage of Bitcoin. But most of the time, the fees are very reasonable, around $1. Right now, it's $2, but it's still not an outrageous amount. Of course, if we're talking about small daily transactions, then it's significant. But if it's for fairly big purchases or transfers, transaction fees are affordable. To me, this situation is acceptable, I'm okay with waiting out the bad periods.

Everything in life has two sides and that is the negative and positive,never expect a complete good things in this area while the truth is we have surely a negative one .

But that does not mean we should only rely in the bad side because it has been proven for how many years now that Bitcoin is helpful to those who are in need of use and advantage .

So I guess this is not really debatable instead thos depend on your needs and belief .