Topic: Title: Near Zero Bitcoin Transaction Fees Cannot Last Forever (Read 4818 times)

If they don't confirm transactions with low fees, then they are throwing away free money. The only way to get fees up is to make people compete for space in the block chain.

I disagree, especially as the block subsidy halves one or two more times. I don't think miners will confirm no/low TX fees in mass once the block subsidy is low as TX fees will make up more of the miners income

That might not work because it will drive the transaction fee down to 1 satoshi, and that may be too low.

That's not going to happen because it requires too much real work from the devs.

I don't think such a feature would be all that difficult to develop. It could easily be setup in a way that is similar to how the difficulty changes - so that, for example, the max block size for the next 2016 blocks would be 250% of the average block size from the previous 2016 blocks.

That's not going to happen because it requires too much real work from the devs. There are dozens of coders working on Bitcoin and only a small handful are getting paid for it. No, it's more likely they will generically increase the block size by a fixed amount at a predetermined rate based on a simple trigger until it's huge.

You can't discuss future transaction fees without addressing the future of the maximum block size. The maximum block size influences transaction fee revenue in two ways: the number of transaction in a block -- more transactions means more revenue, and the result of bidding for limited space in the block. It may be possible to balance these two factors such a way that mining revenue is high while individual transaction fees are low. My hope is that somebody comes up with a self-regulating process for determining the maximum block size that maximizes mining revenue while minimizing individual transaction fees.

hi all,

Thanks for all the comments. I am actually the author of the paper. Since I did my research on bitcointalk forum, I knew most of the info therein is already known by you, tech-savvy bitcoiners. My nevertheless intention in writing the manuscript was to inform the issue to the unfamiliar readers (or noobs in your terminology), raise some questions, help alerting more academicians about working on Bitcoin and related scalability issues, and propose what might be called as a minor contribution perhaps.
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I assume that you are not being serious (or at least are not being serious about this being a good idea). While PoS would allow for more/all 0 TX fee TXs, it would open up the network to a large number of potential attacks and the network would overall be defenseless against such attacks

Proof of Stake

How would you get rid of fees? Miners aren't likely to support a fork without the ability for miners to set a fee requirement to process blocks. Actually, I'm not sure how feasible such a fork would be without entirely removing even voluntary fees. Do that, and you run a serious risk of undermining Bitcoin's security model in the long term.

Without fees, you're left with trusting the preset reward rate to be optimal to guarantee sufficient interest by honest miners to ward off hashpower attacks. Fees provide important room to increase the network hashrate from what the reward rate alone could support.

How would you get rid of fees? Miners aren't likely to support a fork without the ability for miners to set a fee requirement to process blocks. Actually, I'm not sure how feasible such a fork would be without entirely removing even voluntary fees. Do that, and you run a serious risk of undermining Bitcoin's security model in the long term.

Without fees, you're left with trusting the preset reward rate to be optimal to guarantee sufficient interest by honest miners to ward off hashpower attacks. Fees provide important room to increase the network hashrate from what the reward rate alone could support.

In more detail, depending on core developers' approach to trade-off of supporting small or large transactions in the future, whichever in priority, they should not only set a strict transaction fee (rather than a donation) such as [a percentage of the transacted amount] or [a fixed minimal fee + a percentage of the transacted amount], but also do this in a manner such that it fills the gap created by the future slow down of price increase together with the block rewards decrease. That is, to fix the total rewards, I propose the developers that they increase the transaction fees gradually over time, to keep up with a fixed hypothetical sum expressing total block earnings (sum of block rewards + tx fees) per block as follows,

note: The block rewards decrease once in every 4 years at once, as we all know it. Hence we should see cuts in the above graph but assuming it is approximated, we can ignore the cuts for the sake of simplicity.

However, as stated in paper, we all know that it is early for this kind of a modification. So I basically propose this kind of a "transaction fee such as a dynamic (gradually increasing) percentage", not now but in the future, when the time comes. I think it is ok to replace "when the time comes" with "when price of a bitcoin or lets say volatility reaches to the stability level of gold or a well-known fiat currency". Well, that's all about it. Although being arguably straightforward, to the best of my knowledge, I have not seen such a proposal before. As a future research, I believe it is crucial to determine/approximate, what a fixed transaction fee/percentage can/might/should be in a userwise/marketwise pacified/stabilized setting, in order to be able to compare tx savings with competitors such as visa/paypal etc.

Low transaction fees is one of the strengths of bitcoin. If adoption increases, near zero fees can sum up to a good amount in every mined block. There is no real concern.