The double edged sword of Bitcoin transaction fees! - page 2.

stadus

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Quote from: Easteregg69 on October 17, 2024, 06:03:03 AM

I don't know if my opinion is a problem.

Besides fee's. You wanna barter for every half hour of waiting time you cut of by paying extra for block time in an auction when you order your coffee.

You can charge the Tesla while you wait.

If you're looking for quick transactions, Bitcoin might not be the best choice. There’s a proposal called the Lightning Network (LN) that’s designed to solve this issue, but only a few have adopted it so far.

Here’s how it works.

https://lightning.network/

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Transactions for the Future
Instant Payments. Lightning-fast blockchain payments without worrying about block confirmation times. Security is enforced by blockchain smart-contracts without creating a on-blockchain transaction for individual payments. Payment speed measured in milliseconds to seconds.

Scalability. Capable of millions to billions of transactions per second across the network. Capacity blows away legacy payment rails by many orders of magnitude. Attaching payment per action/click is now possible without custodians.

Low Cost. By transacting and settling off-blockchain, the Lightning Network allows for exceptionally low fees, which allows for emerging use cases such as instant micropayments.

Cross Blockchains. Cross-chain atomic swaps can occur off-chain instantly with heterogeneous blockchain consensus rules. So long as the chains can support the same cryptographic hash function, it is possible to make transactions across blockchains without trust in 3rd party custodians.

Easteregg69

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I don't know if my opinion is a problem.

Besides fee's. You wanna barter for every half hour of waiting time you cut of by paying extra for block time in an auction when you order your coffee.

You can charge the Tesla while you wait.

Catenaccio

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Quote from: Gooner0 on October 16, 2024, 11:52:56 PM

Bitcoin transaction fees has been a topic of debate amongst cryptocurrency enthusiast, with opinions divided on their impact.

Debate on it exists in Bitcoin community but you must have one thing, there are altcoins with bigger block size, bigger capacity in block size for more transactions in each block, but these blockchains are dead or less used than Bitcoin blockchain.

So, now it's time to ask a question, why people don't use these blockchains of altcoins?

First, security of these altcoin blockchains are bad. Very low network hashrates, easier to attack their networks with 51% attacks.
https://howmanyconfs.com/

Second, using these altcoin blockchains means you have to store or convert your fund to altcoins that are more volatile than Bitcoin. Their prices can crash and your fund will lose most of its value.

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But the good side of transaction fees or positive side so to say is that it helps prevent spam transactions

It's untrue.

Network spammers are come from new scam trends and trend initiators don't lose anything, they trigger scam trends, and greed people join their scam parties. Expensive transaction fees can not prevent spam transactions, as you saw with Ordinals and Runes in 2023 and 2024.

Zigabel

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High transaction fees is something we know isn't going to last too long, it even fluctuates at some point such that it's not always high, its even often low than it's high which obviously results from miners interest and some economic validation which has been gained from increased adoption over the years as compared to the early years of Bitcoin.

Currently the anticipation for a bull market is so much on the high side which will in turn mean some high demand levels and aswell affect price and transaction fees, putting all of this together gives a good submition to the price and transaction fees increase and like we know it doesn't happen all the time.

freedomgo

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You know, high transaction fees aren’t something that happens every day, it’s usually only when there’s a lot of buying and selling pressure, like during a bull run or market crash. On regular days, Bitcoin fees are pretty low, especially for big transfers, which is way better than what you'd get with a centralized system. Bitcoin's already a legal currency in two countries, and even though it’s not officially recognized everywhere, we’re still using it like real money.

Personally, I’ve been using it regularly, especially for things like gambling. When fees do get high in situations like this, I’m never surprised. What I love is that the system never stops, it keeps going, unlike traditional systems that can freeze up or get overloaded because they're controlled by just a few servers. So yeah, I’m totally okay with occasional high fees, as long as the security and reliability stay solid.

Smartprofit

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Satoshi Nakamoto created Bitcoin as a self-developing system capable of functioning without the direct participation of its Founder.

Financial motivation is one of the strongest motivations in our imperfect material world, so the greed and material interest of miners is what underlies the functioning of the Bitcoin blockchain.

Since the number of already mined Bitcoins is constantly increasing, and their total number is limited (21,000,000 coins), miners are interested in high fees. Bitcoin users, on the contrary, are interested in lower fees.

This contradiction, in my opinion, will lead to Bitcoin becoming an increasingly elite asset (analogous to family diamonds, which are owned only by the richest families with a lot of fiat money, real estate, stocks and other assets). In the future, in my opinion, owning a Bitcoin will confirm the high status of its owner.

NotATether

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Quote from: icalical on October 17, 2024, 02:25:57 AM

I think some of use remember when in August 2024, fees surged by almost 940% due to network congestion, making low-value transactions expensive to send and unpredictable. On the other side, these fees have been essential to maintain security and incentivize miners to verify transactions on the network. In the maturing Bitcoin ecosystem, we're seeing more and more efforts-like the Layer 2 solutions meant to lower fees and increase scalability, such as Lightning Network-which may reduce concerns over cost and usability.

The problem in this case if you want to avoid transaction fees is how to set up your Lightning Network infrastructure so that you can continue to pay for stuff in Bitcoin without fees.

Since using a custodial wallet is not ideal, and swapping bitcoins for an altcoin means you still have to pay the large tx fee for each swap, you somehow need to figure out how you will keep receiving more sats in addition to spending them, so that you don't run out of sats and have to go refill it with some more on-chain BTC (and pay fees).

If you find a way to crack the code, let me know. I know selling stuff for sats, things like merch, is popular, but I haven't quite figured out how to make that work.

icalical

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I think some of use remember when in August 2024, fees surged by almost 940% due to network congestion, making low-value transactions expensive to send and unpredictable. On the other side, these fees have been essential to maintain security and incentivize miners to verify transactions on the network. In the maturing Bitcoin ecosystem, we're seeing more and more efforts-like the Layer 2 solutions meant to lower fees and increase scalability, such as Lightning Network-which may reduce concerns over cost and usability.

For the solutions to avoid the spiking fee, we can use Layer 2 scaling solutions such as the Lightning Network for low-fee, off-chain Bitcoin transactions to reduce the fee and speed up the process. Pros might be that the fees are low, the settlement is faster, and it also improves scalability. Cons might be that these channels sometimes can be considerably less user-friendly and/or security trade-offs versus on-chain. Also, accessibility and reliability-encouraged through developments in the recent past like the growing adoption of products such as Strike and Wallet of Satoshi-continue to get better. Current updates are focused on enhancing liquidity and reducing channel failures in order to make the network robust.

hugeblack

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I don't think the high fees are a problem compared to the confirmation times, I understand that you paid high fees and you may have to wait from one second to 51 minutes, which is what mining a new block may take. The problem of fees can be solved for daily transactions of small amounts in side networks or the second layer, but if it is a transaction of hundreds of dollars, paying less than 1% as fees will not be a problem, and waiting for 50 minutes may not be a problem in many cases.

Alpha Marine

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I see transaction fees as a problem only when the fees are high, other than that I don't see a problem. Transaction fees are mostly under a dollar or sometimes just above a dollar, which is way cheaper than the payment methods. I don't think there's any totally free payment method. The problem comes when the transaction fees of bitcoin become too high and even more expensive than the other payment methods. The problem with this is not only that you have to pay more to transfer your bitcoin, you might have to wait longer periods before confirmation which is not ideal.

Expecting to use bitcoin for free totally is not realistic to some extent because there has to be a fee, so the fee is okay, IMO, but it shouldn't be high. At least not higher than other payment methods. Thankfully, the fees are mostly ever high when there is network congestion, which doesn't happen often.

garlonicon

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Unless we get a capacity increase, this situation is not going to change.

1. Whatever block size limit you will set, it will be reached.
2. The size of the block is not the only limitation. If you increase only that, without changing anything else, then you will hit 80k sigops limit. And there are other limits as well.
3. That's why transaction joining is needed. And full-RBF is the first step in that direction. Today, any replacements are accepted. In the future, next protocols will limit that, and introduce rules, which will tell, which replacements are accepted, and which are not. For example: it is possible to use Proof of Work to limit possible replacements, if you apply OP_SIZE on a signature.

davis196

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Another thing is high cost, exorbitant fees can make small transactions uneconomical. Imagine that!

Expensive small transactions are one of the reasons Bitcoin cannot be widely accepted as a normal currency for everyday use.
There's no solution for this problem and there's no way for Bitcoin to become a normal currency.

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But the good side of transaction fees or positive side so to say is that it helps prevent spam transactions , maintaining network decentralization. There a lot of positive sides to transaction fees , transaction fees are a necessary component of the network, as the ecosystem evolves finding a balance between fee incentives would be crucial for wide spread adoption.

"Prevent" is the wrong word here. High transaction fees can't prevent spam transactions. They can discourage spam transactions, but they cannot stop them. The Bitcoin blockchain has been clogged with spam transactions in the past and it might get stuck again in the future.
The whole problem is the limitation of the BTC blockchain. It simply cannot handle billions of transactions per second. This is the main problem, not the transaction fees. If the blockchain was capable of handling a huge amount of transactions per second, the transaction fees would've been way lower.

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Quote from: Helena Yu on October 17, 2024, 12:47:33 AM

Quote from: Gooner0 on October 16, 2024, 11:52:56 PM

But the good side of transaction fees or positive side so to say is that it helps prevent spam transactions

I have to disagree, even the mempool is busy and you have to pay more than 200sat/vbyte, it doesn't reduce spam transactions by ordinals because as long as they can earn more than what they paid, they're willing to pay expensive fees.

I guess OP is thinking more of those who are not that rich and can’t afford to pay these high transaction fees just to make some little transactions. But we have no exact number of how many people can afford or doesn’t care about high transaction fees and will continue the transaction regardless of the fee vs those who will choose not to continue the transaction to save money.

I view it more as a negative thing to be honest. Especially that it prevents for more use cases when ordinary people (not very rich ones who do not care about fees) can’t use bitcoin on their daily transactions.

Helena Yu

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Quote from: Gooner0 on October 16, 2024, 11:52:56 PM

But the good side of transaction fees or positive side so to say is that it helps prevent spam transactions

I have to disagree, even the mempool is busy and you have to pay more than 200sat/vbyte, it doesn't reduce spam transactions by ordinals because as long as they can earn more than what they paid, they're willing to pay expensive fees.

Fortunately the hype has been ended, but as Bitcoin price is getting higher and higher, there would be a possibility this spam happen again in the next few months.

pooya87

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The main problem we have been facing over the past couple of years is that we are already on the edge. The blocks are already full as it is since adoption keeps increasing. That means each time there is even a small rise in the number of transactions for any reasons, we face a fee spike. That reason can be a volatility in market that leads to more on-chain transactions all the way to spam attacks and the recent protocol abuse by the Ordinals Attackers.

Unless we get a capacity increase, this situation is not going to change.

Fiatless

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High transaction fees are not permanent. It happens mainly when ordinal inscriptions are used to spam the mempool. The price usually drops after the attack has subsided. But there are still other cheaper means of using Bitcoin during these periods of attacks. Yes, this temporal challenge might discourage people from using Bitcoin, but at this time when evil is increasing globally, security and privacy are more important.

Ambatman

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Yeah it's a Lil two sided but more loped towards the positive imo
Layer 2 network, though not fully has been developed in a way to mitigate this and improve not just scalabilty but also reduces fee especially for micro transactions.

Security and decentralization comes first to me before others, projects are been worked on to reduce this downside without sacrificing security.

Gooner0

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Bitcoin transaction fees has been a topic of debate amongst cryptocurrency enthusiast, with opinions divided on their impact.
One one hand fees ensure the security and decentralization of the network, while on the other they can be a barrier to adoption and usability. To me I think this really has a negative and also a positive impact on the cryptocurrency space, and one of the negative aspects I've observed is the uncertainty of fees , unpredictable fees flunctiation create uncertainty for user's . Another thing is high cost, exorbitant fees can make small transactions uneconomical. Imagine that!
But the good side of transaction fees or positive side so to say is that it helps prevent spam transactions , maintaining network decentralization. There a lot of positive sides to transaction fees , transaction fees are a necessary component of the network, as the ecosystem evolves finding a balance between fee incentives would be crucial for wide spread adoption.

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